<PAGE>
As filed with the Securities and Exchange Commission on September 8, 1995
Registration No. 33-43223
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------
POST-EFFECTIVE AMENDMENT NO. 3
ON FORM S-3
TO
REGISTRATION STATEMENT
ON FORM S-1
Under
THE SECURITIES ACT OF 1933
-------------------------------------
ALPHAREL, INC.
(Exact name of registrant as specified in its charter)
California 7371 95-3634089
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation Code Number
9339 Carroll Park Drive
San Diego, California 92121
(619) 625-3000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------------------------------------
STEPHEN P. GARDNER
Chief Executive Officer
Alpharel, Inc.
9339 Carroll Park Drive
San Diego, California 92121
(619) 625-3000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
RUSSELL C. HANSEN, ESQ.
Gibson, Dunn & Crutcher
2029 Century Park East
Suite 4000
Los Angeles, California 90067
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective. If the only
securities being registered on this form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. /x/
<PAGE>
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<PAGE>
PROSPECTUS
ALPHAREL, INC.
862,500 SHARES OF COMMON STOCK
This Prospectus covers 862,500 shares of Common Stock (the "Shares") to be
issued upon exercise of 862,500 Redeemable Common Stock Purchase Warrants (the
"Warrants"). Each Warrant entitles the holder to purchase one share of Common
Stock at a price of $4.25 on or prior to December 12, 1995. The Warrants may be
redeemed in whole or in part by the Company at a price of $.10 per Warrant at
any time upon at least 30 days' prior written notice if the last sale price of
the Common Stock during 20 of the preceding 30 trading days exceeds 120% of the
exercise price of the Warrants. Warrants may be exercised during the 30-day
period after such written notice of redemption has been given by the Company.
The Company's Common Stock and the Warrants presently are traded on The
Nasdaq National Market under the symbols AREL and ARELW, respectively. On
September 6, 1995, the closing sale prices of the Common Stock and Warrants were
$5.875 per share and $1.75 per Warrant, respectively.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION. PROSPECTIVE INVESTORS
SHOULD CONSIDER CAREFULLY THE DISCUSSION UNDER
"RISK FACTORS" LOCATED ON PAGE 3 HEREIN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
The exercise price of the Warrants was determined by negotiations between
the Company and Cohig & Associates Inc., the representative (the
"Representative") of the Underwriters in the Company's public offering of Units
(with each Unit consisting of two shares of Common Stock and one Warrant), which
occurred in December 1991, and was not intended to bear any relationship to any
objective criteria of value. In no event should such exercise price be regarded
as an indicator of any future market price of the Company's securities. For
information regarding the factors considered in determining the exercise price
and the other terms of the Warrants, see "Exercise of the Warrants."
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Underwriting Discounts Proceeds to
Price to Public and Commissions Company(1)
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Per share..... $4.25 -- $4.25
Total......... $3,665,625 -- $3,665,625
-------------------------------------------------------------------------------
<FN>
(1) Before deducting expenses payable by the Company estimated to be
approximately $ 7,500.00.
</TABLE>
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 8, 1995
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") under the
Securities Act of 1933, as amended, with respect to the securities offered
hereby. This Prospectus omits certain information included in the Registration
Statement. For further information about the Company and its securities,
reference is made to the Registration Statement and to the exhibits filed as a
part thereof or otherwise incorporated therein. Each summary in this Prospectus
of information included in the Registration Statement or any exhibit thereto is
qualified in its entirety by this reference to such information or exhibit.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by the
Company with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street
N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
under the Exchange Act are hereby incorporation by reference:
(i) The Company's Annual Report on Form 10-K for the year ended
December 31, 1994; and
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995 and June 30, 1995; and
(iii)The description of the Company's Common Stock included in the
Company's Registration Statement on Form 8-A, dated May 30, 1987.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Shares shall be deemed to be
incorporated in this Prospectus and to be a part hereof from the date of filing
of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written request of any such person, a
copy of any or all of the documents incorporated herein by reference (not
including the exhibits to such exhibits, unless such exhibits are
2
<PAGE>
specifically incorporated by reference in such documents). Requests for such
copies should be directed to: Alpharel, Inc., 9339 Carroll Park Drive, San
Diego, California 92121, Attention: John W. Low, Chief Financial Officer.
Telephone requests may be directed to (619) 625-3000.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD REVIEW, IN ADDITION TO THE INFORMATION SET
FORTH ELSEWHERE IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS IN EVALUATING THE
COMPANY AND ITS SECURITIES.
SUBSTANTIAL LOSSES FROM OPERATIONs. Alpharel sustained substantial net
losses from operations during 1988 and 1989, primarily a result of a decrease in
orders from a single major customer. In response, beginning in late 1989 and
continuing through the first half of 1990, Alpharel implemented a restructuring
program intended to reduce costs. At the same time, new management was put in
place. As a result of the restructuring and the efforts of Alpharel's
management team, Alpharel realized a profit in each of the fiscal quarters from
July l, 1990 through June 30, 1993. However, in September 1993, the Company
acquired Optigraphics Corporation ("Optigraphics"), a privately held imaging
company which had sustained substantial net losses prior to its merger with the
Company. There can be no assurance that the combined company will be able to
achieve profitability or that there will not be fluctuations in quarterly
results.
QUARTERLY PERFORMANCE AND DEPENDENCE ON FEW CUSTOMERS. The purchase of an
electronic document management system is a large capital expenditure for most
customers. As a result, the timing of customer requirements and execution of
contracts may cause revenues and profitability to fluctuate significantly on a
quarterly basis. Although the Company obtains a substantial portion of its
revenues from enhancements, expansion and maintenance of systems previously
installed, sales of large systems to new customers are critical to the Company's
ability to maintain and increase its level of revenues. In addition, the
Company's revenues are dependent upon sales to few customers. Furthermore,
although new systems sold generally provide a basis for potential future
revenues, not all of such systems sales result in substantial additional sales
of expansions, enhancements or maintenance by the Company. There can be no
assurance that additional sales of expansions, enhancements or maintenance will
be made to any past customer in the future. Further, the magnitude of such
additional sales, both in the aggregate and to individual customers, can
fluctuate greatly on a quarterly basis.
EFFECT OF GENERAL ECONOMIC CONDITIONS. Given that the purchase of the
Company's systems is a large capital expenditure for many prospective customers,
such customers may defer purchases of the Company's systems during general
slowdowns in the economy, thereby adversely affecting the Company's revenues.
Recent economic contractions have been more acute in certain sectors of the
economy, such as automotive, aerospace and defense-related manufacturing, in
which many of the Company's principal customers and prospective customers
operate. Any deterioration in economic conditions could lead to a corresponding
decline in the Company's revenues. In addition, the Company's contracts with
its customers typically provide that the customer may terminate its contract at
any time upon proper notice to the Company and payment of costs incurred plus a
reasonable profit on the work performed by the Company prior to such
termination. A prolonged slowdown in the economy could result in certain of the
Company's customers choosing to terminate their contracts prior to the Company's
completion of the services called for by such contracts.
PRODUCT OBSOLESCENCE. The technology used in the Company's products and
systems is subject to rapid change. While the Company believes that its current
research and development capabilities and budget, along with its development
activities under customer contracts, are sufficient to enable it to meet its
currently anticipated product development needs, there can be no assurance that
the Company will be able to foresee or respond to changes in the needs of the
electronic document management systems market in light of the rapid rate at
which new technologies become available. The Company's future success will
depend in part on its ability to develop, introduce and market on a timely basis
software products which incorporate such newly developed technologies.
3
<PAGE>
REPAYMENT OF OUTSTANDING NOTES. In connection with the acquisition of
Optigraphics, the Company issued promissory notes in the aggregate principal
amount of $1,734,000. These notes bear interest at a rate of 6% per annum
and require quarterly interest payments. The notes become due on September
23, 1995. Although no assurances can be given, the Company believes that its
working capital and funds generated from operations will be sufficient to
meet its principal payment obligations. The Company intends to explore all
available financing options in connection with the principal payments on the
notes and may need to establish a line of credit for short-term working
capital purposes.
COMPETITION. The market for the Company's systems is highly competitive.
Certain of the Company's current or potential competitors have significantly
greater financial, technical, manufacturing and marketing resources than the
Company. The Company's ability to compete depends on the success and timing of
new product development by the Company and its competitors, product performance
and price. There can be no assurance that the Company will be able to compete
successfully with respect to these factors.
DEPENDENCE ON MANAGEMENT. Alpharel's success is dependent in part on its
senior management team. Alpharel has not entered into any employment agreements
with its current officers. Alpharel does not carry life insurance policies on
any of its officers. The loss of the service of any of Alpharel's officers
would be detrimental to the Company and affect its operations and prospects.
FLUCTUATIONS OF STOCK PRICE. The market price of Alpharel's Common Stock,
like that of the common stock of many other high-technology companies, has
fluctuated substantially and can be expected to fluctuate further in the future.
The stock market has from time to time experienced extreme price and volume
fluctuations, particularly in the high-technology sector, which may be unrelated
to the operation or performance of particular companies. In addition, factors
such as announcements of technological innovations or new products by Alpharel
or its competitors, as well as market conditions in the computer software or
hardware industries may have a significant impact on the market price of
Alpharel's Common Stock.
NO DIVIDENDS. No dividends have been declared by the Company's Board of
Directors since the Company's inception. The Company does not anticipate paying
cash dividends in the foreseeable future and will use all earnings, if any, to
finance the expansion of its operations.
UNDERWRITER'S UNIT PURCHASE WARRANTS. Pursuant to the Company's public
offering of Units (consisting of two shares of Common Stock and one warrant to
purchase a share of Common Stock) in December 1991, the Company sold to the
Representative, for a nominal amount, warrants to purchase up to 75,000 Units
(the "Underwriter's Unit Purchase Warrants"). The Underwriter's Unit Purchase
Warrants are exercisable during the four-year period commencing December 12,
1992 and will be exercisable at a price of $5.10 per Unit. As the holder of the
Underwriter's Unit Purchase Warrants, the Representative has been given certain
registration rights for such four-year period. The Company will bear
substantially all costs associated with the exercise of such registration
rights. The Representative is likely to exercise the Underwriter's Unit
Purchase Warrants at a time when the Company could obtain funds from the sale of
its shares at a higher price, thereby causing a dilutive effect and potentially
affecting adversely the Company's ability to obtain equity capital at favorable
prices.
FURTHER DILUTION. The Company has reserved 225,000 shares for issuance
upon exercise of the Underwriter's Unit Purchase Warrants (including the shares
issuable upon the exercise of the warrants issued upon the exercise of the
Underwriter's Unit Purchase Warrants). To the extent such shares are issued,
the percentage of Common Stock held by a shareholder will be reduced. Certain
registration rights with respect to the Underwriter's Unit Purchase Warrants and
the filing of a post-effective amendment to the Registration Statement to permit
exercise of the Warrants included in the Units may result in substantial future
expense to the Company.
MARKET OVERHANG. The Company has additional outstanding options and
warrants to purchase its Common Stock. The exercise of such options and
warrants and the sale of the shares of Common Stock acquired by such exercise
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital in the future through an offering of its
equity securities. In addition, substantially all of the shares of the
Company's Common Stock which are "restricted securities" or are held by
affiliates may now be sold under Rule 144. Future sales or potential sales of
such shares could also adversely affect the market price of the Common Stock and
the Company's ability to raise capital.
LIMITATION ON USE OF NET OPERATING LOSS CARRYFORWARDS. The issuance of
equity securities by Alpharel pursuant to its merger with Optigraphics increased
the probability that Alpharel will undergo
4
<PAGE>
a statutory "ownership change," generally defined as a more than 50 percentage
point change of ownership by one or more statutorily defined "5-percent
stockholders" of a corporation, as a result of future issuances or transfers of
equity securities of Alpharel within a three-year testing period. If such an
ownership change were to occur, the use by Alpharel of its existing net
operating loss ("NOL") carryforwards (and tax credits) would be limited for
Federal income tax purposes. Accordingly, Alpharel may be required to pay more
Federal income taxes or to pay such taxes sooner than if the use of its NOL
carryforwards (and tax credits) were not restricted.
THE COMPANY
The Company designs, develops, integrates and markets electronic document
management systems that provide a cost-effective means of electronically storing
and managing documents and drawing images for industrial, commercial and
governmental applications. The Company was incorporated in California in 1981.
Its executive offices are located at 9339 Carroll Park Drive, San Diego,
California 92121, and its telephone number is (619) 625-3000.
PRICE RANGE OF COMMON STOCK AND WARRANTS
The Company's Common Stock and Warrants are traded on The Nasdaq National
Market under the symbols AREL and ARELW, respectively. On September 6, 1995,
the closing sale prices of the Common Stock and Warrants were $5.875 per share
and $1.75 per Warrant, respectively.
The following table shows for the calendar quarter indicated the high and
low sale prices of the Common Stock on The Nasdaq National Market:
<TABLE>
<CAPTION>
Year Ended December 31, 1993 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . . $2.13 $1.25
Second Quarter . . . . . . 2.25 1.25
Third Quarter. . . . . . . 2.38 1.62
Fourth Quarter . . . . . . 2.00 1.38
<CAPTION>
Year Ended December 31, 1994 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . . $1.75 $1.19
Second Quarter . . . . . . 2.44 1.19
Third Quarter. . . . . . . 1.88 1.38
Fourth Quarter . . . . . . 2.16 1.31
<CAPTION>
Year Ended December 31, 1995 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . . $2.13 $1.31
Second Quarter . . . . . . 1.75 1.19
Third Quarter (through
September 6, 1995) . . . 7.25 1.50
</TABLE>
<TABLE>
<CAPTION>
The following table shows for the calendar quarters indicated the high and low
sale prices of the Warrants on The Nasdaq National Market:
Year Ended December 31, 1993 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $0.81 $0.63
Second Quarter . . . . . 0.81 0.50
5
<PAGE>
Third Quarter. . . . . . 0.72 0.56
Fourth Quarter . . . . . 0.59 0.50
<CAPTION>
Year Ended December 31, 1994 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $0.50 $0.44
Second Quarter . . . . . 0.55 0.38
Third Quarter. . . . . . 0.38 0.25
Fourth Quarter . . . . . 0.38 0.13
<CAPTION>
Year Ended December 31, 1995 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $0.44 $0.25
Second Quarter . . . . . 0.28 0.19
Third Quarter (through
September 6, 1995) . . 4.00 0.20
</TABLE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock upon
exercise of all of the Warrants are estimated to be approximately $3,658,000
(assuming exercise of all of the Warrants at the initial exercise price of $4.25
per share). The Company expects to add any such proceeds to its working capital
for general corporate purposes. Pending application, the net proceeds will be
invested in short-term, interest-bearing obligations with maturity dates of one
year or less, which may include U.S. Government securities, money-market funds,
commercial paper, bankers' acceptances, certificates of deposit and repurchase
agreements.
PLAN OF DISTRIBUTION
The Common Stock covered by this Prospectus will be sold from time to time
by the Company upon conversion of the Warrants.
EXERCISE OF THE WARRANTS
In connection with the Company's initial public offering of Units
(consisting of two shares of Common Stock and one warrant to purchase a share of
Common Stock) in late 1991, the Company issued 862,500 Redeemable Common Stock
Purchase Warrants (the "Warrants").
Each Warrant sold to the public originally entitled the holder thereof to
purchase one share of Common Stock at a price of $4.25, the price of one Unit in
the offering, until December 12, 1994. In August 1994, the Board of Directors
of the Company, acting pursuant to authority granted in the Warrant Agreement
covering the Warrants, extended the exercise period of the Warrants to December
12, 1995. During the exercise period of the Warrants, if the last sale price of
the Common Stock exceeds 120% of the exercise price of the Warrants for any 20
business days within any period of 30 consecutive business days immediately
prior to the notice of redemption, then upon at least 30 days' prior written
notice, the Company is permitted to call all or a portion of the Warrants for
redemption at a price of $.10 per Warrant. Warrants may be exercised during the
30-day period after the Notice of Redemption has been given. If less than all
of the Warrants are called at any one time by the Company, then the Warrants
redeemed shall be redeemed on a pro rata basis. The Company may engage in more
than one redemption, provided that the requirements stated above are satisfied
each time that a notice of redemption is issued.
The exercise price of the Warrants was determined by negotiation between
the Company and the Representative and was not intended to bear any relationship
to any objective criteria of value. In no event should such exercise price be
regarded as an indicator of any future market price of the Company's securities.
The Board of Directors of the Company has the right to amend further the terms
of the
6
<PAGE>
Warrants at its discretion, including the right to reduce the exercise price or
to extend the exercise period; provided, however, that no amendment adversely
affecting the rights of the holders of the Warrants may be made without the
approval of the holders of a majority of the outstanding Warrants.
The exercise price of the Warrants, the number of shares of Common Stock
issuable upon their exercise, and the market price which enables the Company to
call the Warrants are subject to adjustment upon the occurrence of certain
events, including stock dividends, stock splits, recapitalizations, mergers or
consolidations.
The Warrants may be exercised prior to expiration or redemption upon
surrender of the warrant certificate at the offices of the warrant agent for the
Warrants, with the subscription form on the reverse side of the warrant
certificate completed and executed as indicated, accompanied by payment of the
full exercise price (which may be cash, certified check or bank check payable to
the order of Alpharel, Inc.) for the number of Warrants being exercised.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1994 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
7
<PAGE>
PROSPECTUS
ALPHAREL, INC.
75,000 UNITS
Consisting of
150,000 SHARES OF COMMON STOCK AND
75,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
This Prospectus relates to (i) the possible issuance by Alpharel, Inc.
(the "Company") of 75,000 Units (the "Units"), each Unit consisting of two
shares of Common Stock of the Company and one Redeemable Common Stock
Purchase Warrant (a "Warrant"), and 75,000 shares of Common Stock to be
issued upon exercise of the Warrants contained in the Units, (ii) the offer
and sale by certain persons (the "Selling Shareholders") from time to time of
150,000 shares of Common Stock and 75,000 Warrants contained in such Units
and 75,000 shares of Common Stock to be issued upon exercise of the Warrants.
The Units will be issued upon the exercise of 75,000 outstanding Unit
Purchase Warrants (the "Unit Purchase Warrants") that entitle the Selling
Shareholders to purchase one Unit at a price of $5.10 on or prior to December
12, 1996. Each Warrant to be issued upon exercise of the Unit Purchase
Warrants entitles the holder to purchase one share of Common Stock at a price
of $4.25 on or prior to December 12, 1995. The Warrants may be redeemed in
whole or in part by the Company at a price of $.10 per Warrant at any time
upon at least 30 days' prior written notice if the last sale price of the
Common Stock during 20 of the preceding 30 trading days exceeds 120% of the
exercise price of the Warrants. Warrants may be exercised during the 30-day
period after such written notice of redemption has been given by the Company.
The Units, the Common Stock and Warrants contained therein and the Common
Stock issuable upon exercise of the Warrants are sometimes collectively
referred to herein as the "Securities." The Company is registering the offer
and sale by the Selling Shareholders of the Securities, but the registration
of such securities does not necessarily mean that any of such securities will
be offered and sold by the holders thereof.
The Company's Common Stock and the Warrants presently are traded on The
Nasdaq National Market under the symbols AREL and ARELW, respectively. On
September 5, 1995, the closing sale prices of the Common Stock and the Warrants
were $5.875 per share and $1.75 per Warrant, respectively.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION. PROSPECTIVE INVESTORS SHOULD
CONSIDER CAREFULLY THE DISCUSSION UNDER "RISK FACTORS"
LOCATED ON PAGE 3 HEREIN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Selling Shareholders may from time to time offer and sell the
Securities held by them directly or through agents or broker-dealers on terms to
be determined at the time of sale. To the extent required, the names of the
agent or broker-dealer and any applicable commissions or discounts and any other
required information with respect to any particular offer will be set forth in
an accompanying Prospectus Supplement. See "Plan of Distribution." Each of the
Selling Shareholders reserves the sole right to accept or reject, in whole or in
part, any proposed purchase of the Securities to be made directly or through
agents.
<PAGE>
The Selling Shareholders and the agents or broker-dealers that participate
with the Selling Shareholders in the distribution of Securities may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any commissions received by them and any profit on
the resale of the Securities may be deemed to be underwriting commissions or
discounts under the Securities Act.
The exercise prices of the Unit Purchase Warrants and the Warrants
contained therein were determined by negotiations between the Company and Cohig
& Associates Inc., the representative (the "Representative") of the Underwriters
in the Company's public offering of Units, which occurred in December 1991, and
were not intended to bear any relationship to any objective criteria of value.
In no event should such exercise prices be regarded as an indicator of any
future market price of the Company's securities. For information regarding the
factors considered in determining the exercise price and the other terms of the
Underwriter's Unit Purchase Warrants and the Warrants, see "Exercise of the
Warrants."
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Underwriting Discounts Proceeds to
Price to Public and Commissions Company(1)
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit...... $5.10 -- $5.10
Per Share upon
exercise of
Warrant...... $4.25 -- $4.25
Total........ $701,250 -- $701,250
<FN>
(1) Before deducting expenses payable by the Company estimated to be
approximately $ 7,500.00.
</TABLE>
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 8, 1995
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") under the
Securities Act of 1933, as amended, with respect to the securities offered
hereby. This Prospectus omits certain information included in the Registration
Statement. For further information about the Company and its securities,
reference is made to the Registration Statement and to the exhibits filed as a
part thereof or otherwise incorporated therein. Each summary in this Prospectus
of information included in the Registration Statement or any exhibit thereto is
qualified in its entirety by this reference to such information or exhibit.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by the
Company with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street
N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
under the Exchange Act are hereby incorporation by reference:
(i) The Company's Annual Report on Form 10-K for the year ended
December 31, 1994;
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995 and June 30, 1995; and
(iii)The description of the Company's Common Stock included in the
Company's Registration Statement on Form 8-A, dated May 30, 1987.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Shares shall be deemed to be incorporated
in this Prospectus and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written request of any such person, a
copy of any or all of the documents
2
<PAGE>
incorporated herein by reference (not including the exhibits to such exhibits,
unless such exhibits are specifically incorporated by reference in such
documents). Requests for such copies should be directed to: Alpharel, Inc.,
9339 Carroll Park Drive, San Diego, California 92121, Attention: John W. Low,
Chief Financial Officer. Telephone requests may be directed to (619) 625-3000.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD REVIEW, IN ADDITION TO THE INFORMATION SET
FORTH ELSEWHERE IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS IN EVALUATING THE
COMPANY AND ITS SECURITIES.
SUBSTANTIAL LOSSES FROM OPERATIONs. Alpharel sustained substantial net
losses from operations during 1988 and 1989, primarily a result of a decrease in
orders from a single major customer. In response, beginning in late 1989 and
continuing through the first half of 1990, Alpharel implemented a restructuring
program intended to reduce costs. At the same time, new management was put in
place. As a result of the restructuring and the efforts of Alpharel's
management team, Alpharel realized a profit in each of the fiscal quarters from
July l, 1990 through June 30, 1993. However, in September 1993, the Company
acquired Optigraphics Corporation ("Optigraphics"), a privately held imaging
company that had sustained substantial net losses prior to its merger with the
Company. There can be no assurance that the combined company will be able to
achieve profitability or that there will not be fluctuations in quarterly
results.
QUARTERLY PERFORMANCE AND DEPENDENCE ON FEW CUSTOMERS. The purchase of an
electronic document management system is a large capital expenditure for most
customers. As a result, the timing of customer requirements and execution of
contracts may cause revenues and profitability to fluctuate significantly on a
quarterly basis. Although the Company obtains a substantial portion of its
revenues from enhancements, expansion and maintenance of systems previously
installed, sales of large systems to new customers are critical to the Company's
ability to maintain and increase its level of revenues. In addition, the
Company's revenues are dependent upon sales to few customers. Furthermore,
although new systems sold generally provide a basis for potential future
revenues, not all of such systems sales result in substantial additional sales
of expansions, enhancements or maintenance by the Company. There can be no
assurance that additional sales of expansions, enhancements or maintenance will
be made to any past customer in the future. Further, the magnitude of such
additional sales, both in the aggregate and to individual customers, can
fluctuate greatly on a quarterly basis.
EFFECT OF GENERAL ECONOMIC CONDITIONS. Given that the purchase of the
Company's systems is a large capital expenditure for many prospective customers,
such customers may defer purchases of the Company's systems during general
slowdowns in the economy, thereby adversely affecting the Company's revenues.
Recent economic contractions have been more acute in certain sectors of the
economy, such as automotive, aerospace and defense-related manufacturing, in
which many of the Company's principal customers and prospective customers
operate. Any deterioration in economic conditions could lead to a corresponding
decline in the Company's revenues. In addition, the Company's contracts with
its customers typically provide that the customer may terminate its contract at
any time upon proper notice to the Company and payment of costs incurred plus a
reasonable profit on the work performed by the Company prior to such
termination. A prolonged slowdown in the economy could result in certain of the
Company's customers choosing to terminate their contracts prior to the Company's
completion of the services called for by such contracts.
PRODUCT OBSOLESCENCE. The technology used in the Company's products and
systems is subject to rapid change. While the Company believes that its current
research and development capabilities and budget, along with its development
activities under customer contracts, are sufficient to enable it to meet its
currently anticipated product development needs, there can be no assurance that
the Company will be able to foresee or respond to changes in the needs of the
electronic document management systems market in light of the rapid rate at
which new technologies become available. The Company's future success will
depend in part on its ability to develop, introduce and market on a timely basis
software products which incorporate such newly developed technologies.
3
<PAGE>
REPAYMENT OF OUTSTANDING NOTES. In connection with the acquisition of
Optigraphics, the Company issued promissory notes in the aggregate principal
amount of $1,734,000. These notes bear interest at a rate of 6% per annum
and require quarterly interest payments. The notes become due on September
23, 1995. Although no assurances can be given, the Company believes that its
working capital and funds generated from operations will be sufficient to
meet its principal payment obligations. The Company intends to explore all
available financing options in connection with the principal payments on the
notes and may need to establish a line of credit for short-term working
capital purposes.
COMPETITION. The market for the Company's systems is highly competitive.
Certain of the Company's current or potential competitors have significantly
greater financial, technical, manufacturing and marketing resources than the
Company. The Company's ability to compete depends on the success and timing of
new product development by the Company and its competitors, product performance
and price. There can be no assurance that the Company will be able to compete
successfully with respect to these factors.
DEPENDENCE ON MANAGEMENT. Alpharel's success is dependent in part on its
senior management team. Alpharel has not entered into any employment agreements
with its current officers. Alpharel does not carry life insurance policies on
any of its officers. The loss of the service of any of Alpharel's officers
would be detrimental to the Company and affect its operations and prospects.
FLUCTUATIONS OF STOCK PRICE. The market price of Alpharel's Common Stock,
like that of the common stock of many other high-technology companies, has
fluctuated substantially and can be expected to fluctuate further in the future.
The stock market has from time to time experienced extreme price and volume
fluctuations, particularly in the high-technology sector, which may be unrelated
to the operation or performance of particular companies. In addition, factors
such as announcements of technological innovations or new products by Alpharel
or its competitors, as well as market conditions in the computer software or
hardware industries may have a significant impact on the market price of
Alpharel's Common Stock.
NO DIVIDENDS. No dividends have been declared by the Company's Board of
Directors since the Company's inception. The Company does not anticipate paying
cash dividends in the foreseeable future and will use all earnings, if any, to
finance the expansion of its operations.
DILUTION. The Company has reserved 862,500 shares for issuance upon
exercise of outstanding Redeemable Common Stock Purchase Warrants (the "Public
Warrants") issued to the public in the Company's initial public offering of
Units that occurred in December 1991. To the extent that such shares are
issued, the percentage of Common Stock held by a shareholder will be reduced.
Additionally, the Public Warrants are likely to be exercised by the holders
thereof at a time when the Company could obtain funds from the sale of its
shares at a higher price, thereby causing a dilutive effect and potentially
adversely affecting the Company's ability to obtain equity capital at favorable
prices.
MARKET OVERHANG. The Company has additional outstanding options and
warrants to purchase its Common Stock. The exercise of such options and
warrants and the sale of the shares of Common Stock acquired by such exercise
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital in the future through an offering of its
equity securities. In addition, substantially all of the shares of the
Company's Common Stock which are "restricted securities" or are held by
affiliates may now be sold under Rule 144. Future sales or potential sales of
such shares could also adversely affect the market price of the Common Stock and
the Company's ability to raise capital.
LIMITATION ON USE OF NET OPERATING LOSS CARRYFORWARDS. The issuance of
equity securities by Alpharel pursuant to its merger with Optigraphics in
September 1993 increased the probability that Alpharel will undergo a statutory
"ownership change," generally defined as a more than 50 percentage point change
of ownership by one or more statutorily defined "5-percent stockholders" of a
corporation, as a result of future issuances or transfers of equity securities
of Alpharel within a three-year testing period. If such an ownership change
were to occur, the use by Alpharel of its existing net operating loss ("NOL")
carryforwards (and tax credits) would be limited for Federal income tax
purposes. Accordingly, Alpharel may be required to pay more Federal income
taxes or to pay such taxes sooner than if the use of its NOL carryforwards (and
tax credits) were not restricted.
4
<PAGE>
THE COMPANY
The Company designs, develops, integrates and markets electronic document
management systems that provide a cost-effective means of electronically storing
and managing documents and drawing images for industrial, commercial and
governmental applications. The Company was incorporated in California in 1981.
Its executive offices are located at 9339 Carroll Park Drive, San Diego,
California 92121, and its telephone number is (619) 625-3000.
PRICE RANGE OF COMMON STOCK AND WARRANTS
The Company's Common Stock and Warrants are traded on The Nasdaq National
Market under the symbols AREL and ARELW, respectively. On September 6, 1995,
the closing sale prices of the Common Stock and Warrants were $5.875 per share
and $1.75 per Warrant, respectively.
The following table shows for the calendar quarter indicated the high and
low sale prices of the Common Stock on The Nasdaq National Market:
<TABLE>
<CAPTION>
Year Ended December 31, 1993 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $2.13 $1.25
Second Quarter . . . . . 2.25 1.25
Third Quarter. . . . . . 2.38 1.62
Fourth Quarter . . . . . 2.00 1.38
<CAPTION>
Year Ended December 31, 1994 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $1.75 $1.19
Second Quarter . . . . . 2.44 1.19
Third Quarter. . . . . . 1.88 1.38
Fourth Quarter . . . . . 2.16 1.31
<CAPTION>
Year Ended December 31, 1995 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $2.13 $1.31
Second Quarter . . . . . 1.75 1.19
Third Quarter (through
September 6, 1995) . . 7.25 1.50
</TABLE>
The following table shows for the calendar quarters indicated the high and low
sale prices of the Warrants on The Nasdaq National Market:
<TABLE>
<CAPTION>
Year Ended December 31, 1993 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $0.81 $0.63
Second Quarter . . . . . 0.81 0.50
Third Quarter. . . . . . 0.72 0.56
Fourth Quarter . . . . . 0.59 0.50
<CAPTION>
Year Ended December 31, 1994 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $0.50 $0.44
Second Quarter . . . . . 0.55 0.38
Third Quarter. . . . . . 0.38 0.25
Fourth Quarter . . . . . 0.38 0.13
5
<PAGE>
<CAPTION>
Year Ended December 31, 1995 High Low
---------------------------- ----- -----
<S> <C> <C>
First Quarter. . . . . . $0.44 $0.25
Second Quarter . . . . . 0.28 0.19
Third Quarter (through
September 6, 1995) . . 4.00 2.00
</TABLE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units and the Common
Stock upon exercise of all of the Unit Purchase Warrants and the Warrants,
respectively, are estimated to be approximately $694,000 (assuming exercise of
all of the Unit Purchase Warrants and the Warrants at the initial exercise
prices of $5.10 per Unit and $4.25 per Warrant). The Company expects to add any
such proceeds to its working capital for general corporate purposes. Pending
application, the net proceeds will be invested in short-term, interest-bearing
obligations with maturity dates of one year or less, which may include U.S.
Government securities, money-market funds, commercial paper, bankers'
acceptances, certificates of deposit and repurchase agreements.
The Company will not receive any proceeds from the sale by the Selling
Shareholders of Common Stock or the Warrants contained in the Units or the
Common Stock issuable upon exercise of the Warrants.
SELLING SHAREHOLDERS
Those persons who may receive the Securities upon exercise of the Unit
Purchase Warrants are referred to herein as "Selling Shareholders."
The table attached hereto as Annex I to this Prospectus sets forth, as of
September 7, 1995, or a subsequent date if amended or supplemented, (a) the name
of each Selling Shareholder and its or his relationship to the Company during
the last three years, (b) the number of shares of Common Stock each Selling
Shareholder beneficially owned prior to this offering (assuming the exercise of
all Unit Purchase Warrants owned by such Selling Shareholder and the exercise of
all Warrants to be issued upon exercise of the Unit Purchase Warrants) and the
number of Warrants each Selling Shareholder beneficially owned prior to this
offering (assuming the exercise of all Unit Purchase Warrants owned by such
Selling Shareholder), (c) the number of shares of Common Stock and Warrants
offered pursuant to this Prospectus by each Selling Shareholder, and (d) the
amount [and percentage] of the Company's Common Stock and Warrants that will be
owned by each Selling Shareholder after completion of this offering (assuming
all of the Securities are sold). The information contained in Annex I may be
amended or supplemented from time to time.
PLAN OF DISTRIBUTION
The Units, Common Stock and Warrants covered by this Prospectus will be
initially sold from time to time by the Company upon conversion of the Unit
Purchase Warrants and the Warrants contained in such Unit Purchase Warrants.
The holders of the Unit Purchase Warrants exercising such Unit Purchase
Warrants after December 12, 1995, the expiration date of the Warrants contained
in the Units to be issued upon exercise of the Unit Purchase Warrants, will only
receive two shares of Common Stock upon exercise of the Unit Purchase Warrants.
The Securities may be sold from time to time to purchasers directly by any
of the Selling Shareholders. Alternatively, the Selling Shareholders may from
time to time offer the Securities through dealers or agents, who may receive
compensation in the form of commissions from the Selling
6
<PAGE>
Shareholders and/or the purchasers of Securities for whom they may act as agent.
The Selling Shareholders and any dealers or agents that participate in the
distribution of Securities may be deemed to be "underwriters" within the meaning
of the Securities Act and any profit on the sale of Securities by them and any
commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act.
At a time a particular offer of Securities is made by the Selling
Shareholders, a Prospectus Supplement, if required, will be distributed that
will set forth the name and names of any dealers or agents and any commissions
or other terms constituting compensation from the Selling Shareholders and any
other required information. The Securities may be sold from time to time at
varying prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Securities may be sold by the Selling Shareholders only through
registered or licensed brokers or dealers. In addition, in certain states, the
Securities may not be sold unless they have been registered or qualified for
sale in such state or an exemption from such registration or qualification
requirement is available and is complied with.
The Securities may be sold in (a) a block trade in which the broker or
dealer so engaged will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction,
(b) transactions in which a broker or dealer acts as principal and resells the
securities for its account pursuant to this Prospectus, (c) an exchange
distribution in accordance with the rules of such exchange, and (d) ordinary
brokerage transactions and transactions in which the broker solicits purchases.
In effecting sales, brokers or dealers engaged by the Selling Shareholders may
arrange for other brokers or dealers to participate. Certain Selling
Shareholders also may, from time to time, authorize underwriters acting as their
agents to offer and sell securities upon such terms and conditions as shall be
set forth in any prospectus supplement. Underwriters, brokers or dealers will
receive commissions or discounts from Selling Shareholders in amounts to be
negotiated immediately prior to sale. Such underwriters, brokers or dealers and
any other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales and any
discounts and commissions received by them and any profit realized by them on
the resale of the securities may be deemed to be underwriting discounts and
commissions under the Securities Act.
There is no assurance that any of the Selling Shareholders will offer for
sale or sell any or all of the Securities covered by this Prospectus.
EXERCISE OF THE UNIT PURCHASE WARRANTS
AND THE WARRANTS
In connection with the Company's initial public offering of 862,500 Units
(each Unit consisting of two shares of Common Stock and one Redeemable Common
Stock Purchase Warrant to purchase a share of Common Stock) in late 1991, the
Company issued 75,000 Unit Purchase Warrants (the "Unit Purchase Warrants") to
the Representative and certain officers of the Representative. The holders of
the Unit Purchase Warrants are referred to herein as the "Selling Shareholders."
Each Unit Purchase Warrant entitles the holder thereof to purchase one Unit at a
price of $5.10 (120% of the price of one Unit in the offering) until December
12, 1996.
Each Warrant contained in the Units originally entitled the holder thereof
to purchase one share of Common Stock at a price of $4.25, the price of one Unit
in the offering, until December 12, 1994. In August 1994, the Board of
Directors of the Company, acting pursuant to authority granted in the Warrant
Agreement covering the Warrants, extended the exercise period of the Warrants to
December 12, 1995. During the exercise period of the Warrants, if the last sale
price of the Common Stock exceeds 120% of the exercise price of the Warrants for
any 20 business days within any period of 30 consecutive business days
immediately prior to the notice of redemption, then upon at least 30 days' prior
written notice, the Company is permitted to call all or a portion of the
Warrants for redemption at a price of $.10 per
7
<PAGE>
Warrant. Warrants may be exercised during the 30-day period after the Notice
of Redemption has been given. If less than all of the Warrants are called at
any one time by the Company, then the Warrants redeemed shall be redeemed on
a pro rata basis. The Company may engage in more than one redemption,
provided that the requirements stated above are satisfied each time that a
notice of redemption is issued.
The exercise prices of the Unit Purchase Warrants and the Warrants were
determined by negotiation between the Company and the Representative and were
not intended to bear any relationship to any objective criteria of value. In no
event should such exercise prices be regarded as an indicator of any future
market price of the Company's securities.
The Board of Directors of the Company has the right to amend further the
terms of the Warrants at its discretion, including the right to reduce the
exercise price to or extend the exercise period; provided, however, that no
amendment adversely affecting the rights of the holders of the Warrants may be
made without the approval of the holders of a majority of the outstanding
Warrants.
The Warrants do not confer upon the holders thereof any voting or dividend
rights or any other rights of a shareholder of the Company.
The Warrants may be exercised prior to expiration or redemption upon
surrender of the warrant certificate at the offices of the warrant agent for the
Warrants, with the subscription form on the reverse side of the warrant
certificate completed and executed as indicated, accompanied by payment of the
full exercise price (which may be cash, certified check or bank check payable to
the order of Alpharel, Inc.) for the number of Warrants being exercised.
The exercise price of the Unit Purchase Warrants and the Warrants, the
number of shares of Common Stock and Warrants, in the case of the Unit Purchase
Warrants, issuable upon their exercise, and the market price which enables the
Company to call the Warrants are subject to adjustment upon the occurrence of
certain events, including stock dividends, stock splits, recapitalizations,
mergers or consolidations.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1994 have been
so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
8
<PAGE>
ANNEX I
<TABLE>
<CAPTION>
Securities Beneficially Securities Beneficially
Owned Prior to Offering Securities Offered Owned Upon Completion of
(1) Hereby Offering(4)(5)
-------------------------- ------------------------- ------------------------
Relationship
Selling to Common Stock Warrants Common Stock Warrants Common Stock Warrants
Shareholder Company (2) (3) (2) (3)
----------- ------------- ------------ -------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Cohig & Associates, Inc. None 108,000 36,900 108,000 36,000 0 900
Eugene C. McColley None 32,625 10,875 32,625 10,875 0 0
Steven M. Bathgate None 45,000 9,000 27,000 9,000 18,000 0
Steven R. Hinkle None 23,375 7,125 21,375 7,125 2,000 0
Edward C. Larkin None 17,750 3,250 9,750 3,250 8,000 0
Rike Wootten None 2,250 750 2,250 750 0 0
James Cohig None 22,500 7,500 22,500 7,500 0 0
Jan Curtis None 750 250 750 250 0 0
Terri Lowe None 750 250 750 250 0 0
</TABLE>
____________________
(1) As of September 7, 1995.
(2) Assumes that all Unit Purchase Warrants and all Warrants issuable upon
exercise of such Unit Purchase Warrants are exercised for Common Stock.
(3) Assumes that all Unit Purchase Warrants are exercised.
(4) The amounts listed represent less than one percent of the respective
class of securities.
(5) Assumes that all shares offered hereby are sold.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
1The estimated expenses in connection with the offering are as follows:
<TABLE>
<CAPTION>
Expenses Amount
-------- ------
<S> <C>
Printing and Engraving . . . . . . . . . $ 0.00
Legal Fees . . . . . . . . . . . . . . . 5,000.00
Transfer Agent and Registrar Fees. . . . 0.00
Accounting Fees and Expenses . . . . . . 4,500.00
Blue Sky Filing Fees and Expenses. . . . 3,500.00
Miscellaneous Expenses . . . . . . . . . 2,000.00
TOTAL. . . . . . . . . . . . . . $15,000.00
<FN>
* Estimated. This amount does not include expenses in connection with the
initial public offering of Units in December 1991 reported by the Company on
its Reports of Sales of Securities and Use of Proceeds Therefrom (Form SR)
filed with the Commission on March 21, 1992 and September 21, 1992.
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 317 of the General Corporation Law of the State of California (the
"GCL") authorizes indemnification when a person is made a party to any
proceeding by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, or was serving as a director, officer,
employee or agent of another enterprise at the request of the corporation, and
if such person acted in good faith and in a manner reasonably believed by him or
her to be in the best interest of the corporation. With respect to any criminal
proceeding, such person must have had no reasonable cause to believe that his or
her conduct was unlawful. If it is determined that the conduct of such person
meets these standards, such person may be indemnified for expenses incurred and
amounts paid in such proceeding if actually and reasonably incurred in
connection therewith.
If such a proceeding is brought by or on behalf of the corporation (i.e., a
derivative suit), such person may be indemnified against expenses actually and
reasonably incurred if such person acted in good faith and in a manner
reasonably believed to be in the best interest of the corporation and its
shareholders. There can be no indemnification with respect to any matter as to
which such person is adjudged to be liable to the corporation in the performance
of his or her duty to the corporation and its shareholders; however, a court
may, even in such cases, allow indemnification to such person for expenses as
the court deems proper. Additionally, there can be no indemnification with
respect to amounts paid in settling or otherwise disposing of a pending action
without court approval or with respect to expenses incurred in defending a
pending action which is settled or otherwise disposed of without court approval.
Where such person is successful in any such proceeding, he or she is
entitled to be indemnified against expenses actually and reasonably incurred by
him or her. In all other cases, indemnification is made by the corporation upon
determination by it that indemnification of such person is proper because such
person has met the applicable standard of conduct.
II-1
<PAGE>
The Articles of Incorporation of the Company authorize the indemnification
of directors and officers to the extent permitted by the GCL, pursuant to which
the Company has entered into indemnity agreements with such persons. The Bylaws
of the Company provide that the Company may indemnify its directors and officers
to the fullest extent permitted by California law, including circumstances in
which indemnification is otherwise discretionary under California law. In
addition, the Company has established an indemnity trust with an initial
principal amount of $250,000, which would serve as a vehicle for funding any
indemnification required to be paid by the Company to its officers and
directors.
ITEM 16. EXHIBITS
Number
Exhibit Exhibits
-------- --------
4.1* Specimen certificate of Common Stock.
4.2* Specimen certificate of Warrant.
4.3* Form of Underwriter's Unit Purchase Warrant.
4.4* Warrant Agreement dated December 12, 1991 by and between the
Company and Security Pacific National Bank, as Warrant
Agent.
4.5* Form of Amendment to Warrant Agreement by and between the
Company and Chemical Trust Company of California, Inc., as
the successor Warrant Agent.
5.1* Opinion of Gibson, Dunn & Crutcher.
23.1 Consent of Independent Accountants.
23.2* Consent of Gibson, Dunn & Crutcher, counsel for the Company
(included in Exhibit 5.1).
24.1* Power of Attorney.
---------
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising out of the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable, in the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant and the successful defense in any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<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-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on
September 7, 1995.
ALPHAREL, INC.
By: /s/ John W. Low
-------------------------
Its: Chief Financial Officer and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
----------*----------- Chairman of the Board September 7, 1995
Robert T. Bruce
/s/ Stephen P. Gardner
---------------------- Chief Executive Officer, President September 7, 1995
Stephen P. Gardner and Director (Principal
Executive Officer)
---------------------- Director September , 1995
Dominic Chan
---------------------- Director September , 1995
D. Ross Hamilton
----------*----------- Director September 7, 1995
Michael J. McGovern
----------*----------- Director September 7, 1995
Larry D. Unruh
/s/ John W. Low
---------------------- Chief Financial Officer and September 7, 1995
John W. Low Secretary (Principal
Financial and Accounting
Officer)
*By /s/ John W. Low
---------------
John W. Low,
Attorney-in-Fact
II-4
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post-Effective Amendment No. 3 of the Registration
Statement on Form S-3 (No. 33-43223) of our report dated February 23, 1995
appearing on page 19 of Alpharel, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1994. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
San Diego, California
September 5, 1995
