As filed with the Securities and Exchange Commission on March 18, 1998
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
THE TIREX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 3282985
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
740 St. Maurice, Suite 201
Montreal, Quebec H3C 1L5
(Address of Principal Executive Offices) (Zip Code)
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN REGISTRANT AND:
TERENCE C. BYRNE
(Full title of the Plan)
Frances Katz Levine
621 Clove Road
Staten Island, NY 10310
(Name and address, including zip code of agent for services)
(718) 981-8485
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered per Share* Price* Fee
==============================================================================================================
<S> <C> <C> <C> <C>
Common Stock, Par Value,
$.001 Per Share, Issued
Pursuant to Compensation
Agreement With
Terence C. Byrne 475,303 $ 0.275 $130,708.32 $ 39.61
------- ----------- -------
TOTAL 475,303 $ 0.275 $130,708.32 $100.00
=============================================================================================================
</TABLE>
* Estimated solely for the purpose of calculating the amount of the registration
fee pursuant to Rule 457(c) on the basis of the average of the closing bid and
ask prices of the Common Stock of the Registrant as traded in the
over-the-counter market and reported in the Electronic Bulletin Board of the
National Association of Securities Dealers on March 12, 1998.
<PAGE>
Cross Reference Sheet Showing Location in Reoffer Prospectus of
Information Required by Items of Part I of Form S-3 Included Herein
Under Cover of Form S-8, Pursuant to Rule 404(a)
Form S-3 Item No. and Heading Heading in Prospectus
----------------------------- ---------------------
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus ............................. Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.................... AVAILABLE INFORMATION;
REPORTS TO SHAREHOLDERS;
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE;
TABLE OF CONTENTS
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges .... Outside Front Cover Page;
THE COMPANY; RISK FACTORS
4. Use of Proceeds............................ Not Applicable
5. Determination of Offering Price............ Outside Front Cover Page; PLAN
OF DISTRIBUTION
6. Dilution................................... Not Applicable
7. Selling Security Holders................... SELLING SHAREHOLDER
8. Plan of Distribution....................... Outside Front Cover Page; PLAN
OF DISTRIBUTION
9. Description of Securities
to be Registered ....................... DESCRIPTION OF SECURITIES
10. Interests of Named Experts and Counsel EXPERTS; LEGAL OPINIONS
11. Material Changes........................... Not Applicable
12. Incorporation of Certain Information
by Reference............................ INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
13. Disclosure of Commission Position
on Indemnification For Securities
Act Liabilities ........................ INDEMNIFICATION
2
<PAGE>
R E O F F E R
P R O S P E C T U S
- --------------------------------------------------------------------------------
475,303 Shares
----------
THE TIREX CORPORATION
----------
Common Stock
$.001 Par Value
The shares of common stock offered hereby (the "Shares") are being sold by
Terence C. Byrne, a shareholder of The Tirex Corporation (the "Company"); Mr.
Byrne is hereinafter referred to as the "Selling Shareholder". The Company will
not receive any of the proceeds from the sale of the common stock. The common
stock is traded in the over-the-counter market, as reported in the
Over-The-Counter Electronic Bulletin Board of the National Association of
Securities Dealers ("Bulletin Board"). On March 12, 1998, the high ask and low
bid prices of the Company's common stock, as quoted on the Bulletin Board, were
$0.29 and $0.26 per share, respectively. The Selling Shareholder proposes to
offer his Shares for sale in the over-the-counter market through customary
brokerage channels at the then-current market price. See "Plan of Distribution".
----------
THIS OFFERING INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is March 18, 1998
1
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of Section 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 1100 L Street, N.W. Room 6101, Washington, D.C.
20005; 26 Federal Plaza, Room 1100, New York, New York 10007; 10960 Wilshire
Boulevard, Suite 1710, Los Angeles, California 90024; and 219 South Dearborn
Street, Room 1228, Chicago, Illinois 60604; and copies of such material can be
obtained from the Public Reference Section of the Commission at 500 North
Capital Street, N.W., Washington, D.C. 20549 at prescribed rates.
REPORTS TO SHAREHOLDERS
The Company intends to furnish to its shareholders annual reports
containing audited financial statements together with an opinion with respect
thereto by its independent certified public accountants.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's annual report on Form 10-KSB for its fiscal year ended June 30, 1997,
filed pursuant to Section 15(d) of the Exchange Act, the Company's quarterly
reports on Forms 10-QSB for the fiscal quarters ended September 30, 1997 and
December 31, 1997, filed pursuant to Section 15(d) of the Exchange Act, the
Company's Current Reports on Form 8-K, dated July 11, 1997 and February 3, 1998,
filed on August 13, 1997 and February 17, 1998, respectively, and all other
reports, if any, filed by the Company pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year ended June 30, 1997.
All reports and definitive proxy or information statements filed 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 by reference into 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 incorporated or deemed to be incorporated by reference
herein modified 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.
Any person receiving a copy of this Prospectus may obtain without charge,
upon request, a copy of any of the documents incorporated by reference herein,
except for the exhibits to such documents. Requests should be directed to
Terence C. Byrne, The Tirex Corporation, 740 St. Maurice, Suite 201, Montreal,
Quebec Canada, H3C 1L5.
2
<PAGE>
TABLE OF CONTENTS
Available Information......................................
Incorporation of Certain Documents
by Reference............................................
The Company................................................
Risk Factors
1. Development Stage Company - No Assurance
as to Future Profitable Operations................................6
2. Need for Substantial Additional
Capital...........................................................7
3. Going Concern Assumption............................................8
4. No Guarantee of Product
Acceptance in Market..............................................8
5. Proposed Public Offering:
Reverse Split.....................................................9
6. Dilutive and Other Adverse Effects
of Debentures and Warrants and Presently
Outstanding Options..............................................10
7. Dependence on Major Customer.......................................11
8. Control by Present Officers:
Possible Depressive Effect.......................................12
9. Uncertainty of Product and
Technology Development:
Technological Factors............................................12
10. Patent Protection of Tirex Proprietary
Technology and Potential Infringement............................12
11. Limited Public Market..............................................13
12. Applicability of "Penny Stock Rules"
to Broker-Dealer Sales of
Company Common Stock.............................................14
13. Experience of Management...........................................15
3
<PAGE>
14. Dependence on Key Personnel........................................16
15. Regulatory and Environmental Considerations........................16
16. Production and Supply..............................................17
17. Technological Changes..............................................17
18. Competition........................................................18
19. Liability Insurance................................................18
20. No Dividends and None Anticipated..................................18
21. Authorization of Preferred Stock...................................19
Selling Shareholder........................................................8
Plan of Distribution......................................................12
Description of Securities.................................................12
Experts...................................................................13
Legal Opinions............................................................13
Indemnification...........................................................14
4
<PAGE>
THE COMPANY
The Tirex Corporation (hereinafter, the "Company") was incorporated in
Delaware on August 19, 1987 under the name "Concord Enterprises, Inc." Its name
was changed to "Stopwatch Inc." on June 20, 19891 and to "Tirex America Inc." on
March 10, 1993. On July 11, 1997, in order to encompass the current and
projected international scope of its operations, the Company's name was changed
to "The Tirex Corporation". The Company, directly and through its subsidiary
"Tirex Canada Inc.",2 is presently engaged in the early stages of the business
of developing, manufacturing, selling, and leasing a cryogenic tire
disintegration system (the "TCS-1 System") which integrates proprietary
disintegration technology with established conventional mechanical and
technologies.
The Company acquired its proprietary tire disintegration technology (the
"Tirex Technology") in the fall of 19923. Since the beginning of 1993, it has
devoted the bulk of its efforts to completing the design and development, and
commencing the manufacture, of the TCS- 1 System and raising the financing
required for such project. In August of 1995, the Company moved its corporate
headquarters to Quebec and formed its subsidiary, 3143619 Canada Inc. (known and
doing business, and hereinafter referred to, as "Tirex Canada Inc."). Design and
development work on the first production model of the TCS-1 System has been
brought to approximately 90% completion. Construction of such System began in
February of 1997. The fully-automated front-end sidewall cutter and debeader
module of the System was completed in November 1997 and was delivered to the
Company's first customer, Oceans Tire Recycling & Processing Co., Inc., of Toms
River, New Jersey with delivery of the cryogenic tire freezing section following
in March of 1998. Completion of the balance of the System remains dependent upon
the Company's obtaining sufficient funding for such purpose, but is expected to
be occur by April 1998 (see Risk Factor No. 2. "Need for Substantial Additional
Capital"). The Company began taking orders on the TCS-1 System in October of
1995 and, to date, has received deposits of $25,000 each on five Systems. The
Company has located and entered into written and oral agreements with various
engineering and manufacturing subcontractors and component suppliers,
- --------------
1 For a discussion of the merger with Stopwatch, the healthcare business
which was intended, but was never commenced, by Stopwatch, and the reasons
for the termination of the Stopwatch business plan, reference is made to
Item 1 of Registrant's annual report on Form 10-K for the fiscal year
ended December 31, 1988, its transition report on Form 10-K for the
transition period ended June 30, 1989, and its annual report on Form
10-KSB for the fiscal year ended June 30, 1995.
2 Unless context necessarily requires otherwise, references hereinafter to
the "Company" refer to The Tirex Corporation and its subsidiary, Canadian
Corporation 3143619 (known and doing business as "Tirex Canada Inc."),
collectively.
3 For discussions in detail of the Company's acquisition of the Tirex
Technology and the associated corporate and management changes which took
place between the autumn of 1992 and January of 1995, reference is made to
the discussions thereof included in Item I of the Company's annual reports
of Forms 10-KSB for the fiscal years ended June 30, 1995 and June 30,
1996.
5
<PAGE>
which Management believes will supply it with sufficient production capacity to
meet all current and projected orders, on a timely basis, commencing upon
satisfactory completion of testing operations of the initial TCS-1 System (see
"Products and Services" below). For a more detailed discussion of the Company's
proposed business, the Tirex Technology, the proposed TCS-1 System, and the
share ownership of Tirex Canada, reference is made to Part I, Item of the
Company's annual report on Form 10-KSB for the fiscal year ended June 30, 1997,
which is incorporated herein by reference.
Recent Financing Activities
The Company recently completed a merger (the "RPM Merger") of RPM
Incorporated, a privately-held Delaware corporation ("RPM") with and into the
Company's wholly-owned subsidiary Tirex Acquisition Corp. ("TAC"). The RPM
merger was effected after an initial closing (the "Initial RPM Closing") of a
private placement of the securities of RPM (the "Type A Private Placement"). The
securities offered in the RPM Merger consisted of up to 85 units (the "RPM
Units") at a price of $10,300 per RPM Unit, each RPM Unit consisting of one 10%
Convertible Subordinated Debenture in the principal amount of $10,000 (the "Type
A Debentures") and 10,000 shares of the common stock of RPM, $.001 par value
("RPM Common Stock"). In effectuation of the RPM Merger: (i) the Company
exchanged one share of its common stock for every issued and outstanding share
of RPM common stock and assumed RPM's liabilities and obligations under its 10%
subordinated, convertible debentures in the aggregate principal amount of
$305,000; (ii) The Initial RPM Closing was held upon completion of the sale of
30.5 RPM Units, yielding gross proceeds in the amount of $314,150 and all of
such proceeds, net of the placement agent's 10% commission and certain other
offering expenses in the aggregate amount of $6,650 (yielding net proceeds in
the amount of $276,085) remained in RPM when it was merged into TAC.
Since the RPM Merger, the Company has, through its placement agent, a
broker-dealer registered with the National Association of Securities Dealers,
Inc. (the "Placement Agent"), continued to offer the balance of the RPM Units,
with the exchange of the Company's common stock for RPM common stock and the
Company's assumption of the RPM debentures being deemed to have occurred
concurrently with the RPM Merger. All of the Units sold in this Private
Placement, as continued by the Company subsequent to the merger, consist of
10,000 shares of the Company's common stock and one Company 10% convertible
debenture in the principal amount of $10,000 (the "Type "A" Debentures") and are
referred to hereinafter as the "Type A Units". In connection with the
post-Merger continuation of the Type A Private Placement, the Company held a
second closing on January 23, 1998, respecting the sale of an additional 8.5
Type A Units, yielding net proceeds of $78,795. The remainder of 46 Type A Units
will continue to be offered by the Company until March 1, 1998, unless the
Company and the Placement Agent agree to extend the offering period. The Type A
Units are being offered made only to a limited number of sophisticated investors
who understand and are economically capable of accepting the risks associated
with a speculative investment, including the complete loss of such investment
and who are "Accredited Investors" within the meaning prescribed by
6
<PAGE>
Regulation D and Rule 501 of the Securities Act. The first 30 RPM Units were
offered and sold on a "best efforts, all-or-none" basis. The remaining 55 Type A
Units have been offered by the Company since the Merger on a "best efforts"
basis. Prior to the Initial Closing, RPM offered, and since the Initial Closing,
the Company has continued to offer, the RPM (or Type A) Units in reliance upon
the availability of an exemption from the registration provisions of the
Securities Act by virtue of compliance with the provisions of Section 4(2) of
the Securities Act and Rule 506 of Regulation D thereof. Completion of the Type
A Private Placement, if it occurs, would yield additional net proceeds to the
Company in the amount of $426,420 after deduction of the Placement Agent's 10%
commission on all sales. The Type A Debentures are convertible, at any time
prior to maturity, at a conversion ratio of one share for every $0.20 of the
face amount of the Debenture.
As part of the Merger, 3,000,000 shares of the common stock of RPM, which
constituted all of the shares of RPM Common Stock which were issued and
outstanding prior to the commencement of the Type A Private Placement, were
exchanged for shares of Tirex Common Stock, on a share-for-share basis, in
consideration of RPM's waiver of certain consulting fees in the amount of $4,000
per month, accrued prior and subsequent to the Merger pursuant to the terms of a
certain five-year consulting agreement, dated June 9, 1997, among RPM, the
Company, and two individuals who were, prior to the Merger, RPM's principal
shareholders, officers, and directors.
The Company is also presently endeavoring to complete a second private
placement (the "Type B Private Placement") through the Placement Agent, of 28
Units, (the"Type B Units") at a price of $25,000 per Unit, each Type B Unit
consisting of one 10% Convertible Subordinated Debenture in the principal amount
of $25,000 (the "Debentures") and 50,000 warrants (the "Warrants") to purchase a
like number of shares of the Common Stock of the Company (the "Warrant Shares").
The Debentures are convertible into shares of the Company's Common Stock (the
"Conversion Shares") at a conversion ratio of 85% of Market Price prior to March
31, 1998 and at 75% of market price after March 31, 1998. The Debentures are
redeemable at any time after issuance at 100% of face value prior to March 31,
1998 and at 125% of face value after March 31, 1998. Both the Warrant Shares and
the Conversion Shares have registration rights and the Company has agreed that
all of such shares will be registered as promptly as possible following the
completion and closing of the Type B Private Placement.
As is the case with the Type A Units, the Type B Units are being offered
only to a limited number of sophisticated investors who understand and are
economically capable of accepting the risks associated with a speculative
investment, including the complete loss of such investment, and who are
"Accredited Investors" within the meaning prescribed by Regulation D and Rule
501 of the Securities Act. The Type B Units are being offered by the Company in
reliance upon the availability of an exemption from the registration provisions
of the Securities Act by virtue of compliance with the provisions of Section
4(2) of the Securities Act and Rule 506 of Regulation D thereof. To date, no
sales & have been made in the Type B Private Placement, which, if completed,
would yield net proceeds to the Company in the amount of $609,000 after
deduction of the Placement Agent's 10% commission and 3% non-accountable
7
<PAGE>
expense allowance. The first 10 Type B Units are being offered on a "best
efforts, all-or-none" basis during an offering period which will expire on
January 31, 1998, unless extended by the mutual agreement of the Placement Agent
and the Company. The remaining 18 Type B Units will be offered and sold on a
"best efforts" basis. The Company and the Placement Agent reserve the right to
offer the Type B Units on more favorable terms to one or more investors, who are
not affiliates of the Company or of the Placement Agent, without notice to other
investors. The basis for any such variance in the terms of the Type B Private
Placement will include without limitation the amount of the individual
investment and the point in the Offering Period when such investment is made.
For a discussion of the possible dilutive effects, on the Shares being
sold under this Prospectus, which may result from the above described financing
activities and other existing factors, reference is made to Risk Factor No. 6
"Dilutive and Other Adverse Effects of Debentures and Warrants and Presently
Outstanding Options", below.
The Company's principal executive offices are located at 740 St. Maurice ,
Suite 201, Montreal, Quebec H3C 1L5. Its telephone number is (514) 878-0727.
RISK FACTORS
Prospective investors should carefully consider all of the information
contained in this Prospectus before deciding whether to purchase Shares and, in
particular, the factors set forth below. Information contained in this
Prospectus contains "forward-looking statements" which can be identified by the
use of forward-looking terminology such as "believes", "expects", "may",
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology or by discussions of strategy. No assurance can be given
that the future results covered by the forward-looking statements will be
achieved. The following Risk Factors include, among other things, cautionary
statements with respect to certain forward-looking statements, including
statements of certain risks and uncertainties that could cause actual results to
vary materially from the future results referred to in such forward-looking
statements.
As a new enterprise, the Company is likely to remain subject to risks and
occurrences which management is unable to predict with any degree of certainty,
and for which it is unable to fully prepare. While the Company expects its
revenues to increase as manufacturing operations respecting the TCS-1 develop,
new products are introduced, and maintenance and rubber brokerage services are
initiated. Significant additional expenses will be incurred in developing and
marketing its products and in providing its contract services. Growth in the
Company's business could be expected to be accompanied by strains on the
Company's administrative, financial and operating resources. The Company's
ability to manage growth effectively will require it to continue to expand and
improve its operational, financial, and management controls, and to train,
motivate and manage its employees. In any event, there is no assurance that the
Company will achieve revenue growth sufficient to offset anticipated increases
in costs, nor is
8
<PAGE>
there any assurance that the Company will be successful in overcoming problems
associated with unforeseen costs and competition, technical problems associated
with new products and technology, and other risks which all business ventures
face and which could be especially acute for a relatively new company attempting
to establish and expand its business in a highly competitive industry
characterized by rapid technological and market development and change. For all
of the foregoing reasons, as well as the specified Risk Factors described below,
any purchase of the Shares should be considered a speculative investment
involving a significant risk of loss.
1. Development Stage Company; No Assurance as to Future Profitable
Operations. There is no assurance that the Company will generate net income or
successfully expand its operations in the future. Because it is in the
development stage and has had no significant operations to date, the Company
cannot predict with any certainty the future success or failure of its
operations. Its proposed operations are subject to all of the risks inherent in
the establishment of a new business enterprise, including the absence of any
significant operating history. The likelihood of the success of the Company must
be considered in light of the problems, expenses, difficulties, complications
and delays frequently encountered in connection with the formation of a new
business and the competitive environment in which the Company will operate. The
Company has had no significant operating revenues to date and there can be no
assurance of future revenues. There is limited evidence at this time upon which
to base an assumption that the Company's proposed business will prove successful
or that its proposed TCS- 1 System will be successfully developed, manufactured,
and marketed. As a consequence, there is no assurance that the Company will be
able to operate profitably in the future. Additionally, the Company has a very
limited business history which investors can analyze to aid them in making an
informed judgment as to the merits of an investment in the Company. Any
investment in the Company should therefore be considered a high risk investment
because investors will be placing their funds at risk in an unseasoned start-up
company.
2. Need For Substantial Additional Capital. The Company presently requires
funding to complete the development of the TCS-1 System and to commence
manufacturing and marketing operations. The Company's future capital
requirements will depend upon numerous factors, including the amount of revenues
generated from operations (if any), the cost of the Company's sales and
marketing activities and the progress of the Company's research and development
activities, none of which can be predicted with certainty. The Company recently
completed a merger (the "RPM Merger") of RPM Incorporated ("RPM") with and into
the Company's wholly-owned subsidiary Tirex Acquisition Corp. ("TAC"). The RPM
merger was effected after an initial closing of a private placement of the
securities of RPM (the "Type A Private Placement") upon completion of sales
yielding gross proceeds in the amount of $314,150. In effectuation of the RPM
Merger: (i) the Company exchanged one share of its common stock for every issued
and outstanding share of RPM common stock and assumed RPM's liabilities and
obligations under its 10% subordinated, convertible debentures in the aggregate
principal amount of $305,000; (ii) All of the proceeds from the Type A Private
Placement remained in RPM when it was merged into TAC, which was the surviving
entity (see "Business - Financing Activities"). Since the RPM Merger, the
Company has continued to offer the balance of the securities which had
originally been offered by RPM in the Type A Private Placement, with the
exchange of RPM
9
<PAGE>
common stock for Company common stock and the Company's assumption of the RPM
debentures being deemed to have occurred concurrently with the RPM Merger. On
January 23, 1998 the Company closed on sales made in the Type A Private
Placement, which yielded net proceeds of $78,795. Completion of the Type A
Private Placement, if it occurs, would yield additional gross proceeds to the
Company in the amount of $463,500. The Company is also presently endeavoring to
complete an additional private placement of its securities, through a placement
agent, in an aggregate amount ranging from $250,000 to $700,000 (the "Type B
Private Placement"). The Company is unable to state at this time whether either
of the foregoing Private Placements will be successfully completed (see Risk
Factor No. 6 "Dilutive and Other Adverse Effects of Debentures and Warrants and
Presently Outstanding Options" and "Business - Financing Activities"). In the
event that both or one of such Private Placements are successfully completed,
the proceeds therefrom are expected to permit the Company to operate through
June 1998 and to complete the construction of the first production model of the
TCS-1 System.
The Company anticipates that only limited revenues will be available to
fund its operations without substantial additional capital. Further, although
the Company has signed a Letter of Intent with a broker-dealer registered with
the National Association of Securities Dealers, Inc., for the underwriting of a
proposed public offering (the "Proposed Public Offering") of the Company's
Common Stock in an amount of not less than $8,000,000, there can be no assurance
that such public offering will in fact be effected and, if effected, will be
successfully completed or, even if it is completed, that the Company will
receive adequate financing from the Proposed Public Offering. See Risk Factor
No. 5 "Proposed Public Offering; Reverse Split." The Company does not currently
have in place, other current options to fund its continued existence. In the
event that the Private Placements are not completed or, if they are completed,
but the Proposed Public Offering does not occur or does not occur within a
reasonable time following the Private Placements, the Company could be required
to reduce or suspend its operations, seek an acquisition partner or sell
securities on terms that may be highly dilutive or otherwise disadvantageous to
investors purchasing the Units offered hereby. The Company has experienced in
the past, and may continue to experience, operational difficulties and delays in
its product development due to working capital constraints. Any such
difficulties or delays could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations").
Moreover, if the Proposed Public Offering does not occur on a timely basis, the
Company may be unable to fund its business plan and may be forced to cease to
operate. In such event, purchasers of any of the securities being registered
hereby may lose their entire investment.
3. Going Concern Assumption. The Company's independent auditors' report on
the Company's financial statements for the years ended June 30, 1996 and 1997,
contains an explanatory paragraph indicating that: (i) the Company is still in
the development stage; (ii) it cannot be determined at this time that the
Company's tire disintegration technology will be developed to a productive
stage; and (iii) the Company's uncertainty as to its productivity and its
ability to raise sufficient capital raise substantial doubt about its ability to
continue as a going concern. In addition, the Company had an accumulated deficit
of $3,761,277 at June 30, 1997. The Company may require substantial additional
funds in the future, and there can be no
10
<PAGE>
assurance that any independent auditors' report on the Company's future
financial statements will not include a similar explanatory paragraph if the
Company is unable to raise sufficient funds or generate sufficient cash from
operations to cover the cost of its operations. The existence of the explanatory
paragraph may materially adversely affect the Company's relationship with
prospective customers and suppliers, and therefore could have a material adverse
effect on the Company's business, financial condition and results of operations.
4. No Guarantee of Product Acceptance in Market. The first production
model of the TCS-1 System has not yet been completed and there is no history of
commercial operations of the TCS-1 System. There can be no assurance that the
TCS-1 System will be accepted in the market for tire disintegration equipment.
Moreover, the Company has not conducted market research that focuses on the
potential demand for the TCS-1 System to the exclusion of other types of tire
disintegration equipment. Therefore, the Company is not able to estimate with
any assurance the potential demand for the TCS-1 System, if any. There can be no
assurance that sufficient market penetration can be achieved so that projected
production levels of the TCS-1 System will be absorbed by the market (see
"Business-Sales and Marketing").
5. Proposed Public Offering: Reverse Split. The proposed terms for the
Proposed Public Offering require that not more than 10,000,000 shares of the
Company's Common Stock be issued and outstanding prior to the commencement of
the public offering. There are presently 47,644,182 shares of the Company's
Common Stock issued and outstanding. If the Private Placements are completed and
all of the Warrants are exercised, there will be an additional 1,810,000 shares
issued and outstanding prior to the conversion of any part of the Type B
Debentures or the Type A Debentures. Conversion of the Type A Debentures will
result in the issuance of an additional 4,250,000 shares. The conversion ratio
of the Type B Debentures is keyed to the average of the closing bid prices of
the Common Stock, as reported in the OTC Bulletin Board during the five-day
period preceding the Company's receipt of a notice of conversion from a Type B
Debenture holder. It is therefore impossible to state the number of shares which
the Company would actually be obligated to issue in the event that such Type B
Debentures were to be converted. However, by way of example, using for a
conversion ratio, the average of the closing bid prices of the Company's Common
Stock during the five-day period preceding January 26, 1998 ($0.224), and
assuming that for the conversion will take place after March 31, 1998 at a
conversion ratio of 75% of the market price ($0.168), the Company would be
obligated to issue an additional 4,166,666 shares upon such conversion. The
Company is also obligated to sell 8,551,769 shares of its common stock upon the
exercise of presently issued and outstanding options. In addition, the Company
is obligated to issue 481,250 shares to an unaffiliated consultant over the next
two years. With respect to the foregoing options and issuance to consultant,
where the option exercise price was related to the market price of the Company's
Common Stock at the time of exercise, the average closing price of the Company's
Common Stock during the five days preceding January 26, 1998 ($0.224), has been
used for purposes of estimating the number of shares to be issued and sold. If
all of the foregoing stock issuances occurred, at exercise prices, where
applicable, keyed to current market prices, as described above, there would be a
total of 63,530,328 shares of the Company's common stock issued and outstanding.
In such case, the CGT Option, which entitles CGT to purchase a number
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of shares equal, on a fully diluted basis, to 10% of the total issued and
outstanding common stock of the Company, could be exercised for a total of
7,058,925 shares. Although the Company is confident that all such options and
issuances will not occur prior to the Proposed Public Offering, if ever,
theoretically, such events could occur, in which case the total number of shares
of the Company's Common Stock issued and outstanding prior to the Proposed
Public Offering would be 70,589,253. While the number of shares, which the
proposed underwriter will allow to be outstanding prior to the Proposed Public
Offering may be adjusted to reflect a change in the development and consequent
valuation of the Company, persons who purchase any of the securities being
registered hereby prior to the effectuation of such reverse split should note
that, if the Proposed Public Offering is effected, the number of such securities
may be substantially reduced by the requirement that there be not more than
10,000,000 shares of the Company's Common Stock issued and outstanding prior to
such offering. This would require a reverse split of all of the Company's issued
and outstanding shares.
6. Dilutive and Other Adverse Effects of Debentures and Warrants and
Presently Outstanding Options. The securities being offered by the Company in
the two Private Placements (respectively, the "Type A Private Placement" and the
"Type B Private Placement"), which it is currently conducting, consist of the
following: (i) 85 "Type A Units", each consisting of 10,000 shares of the
Company's Common Stock and one 10% convertible, subordinated debenture in the
principal amount of $10,000 (the "Type A Debenture") at a per Unit price of
$10,300; and (ii) 28 "Type B Units", each consisting of 50,000 common stock
purchase warrants (the "Warrants") to purchase a like number of shares of the
Company's Common Stock and one 10% convertible, subordinated debenture in the
principal amount of $25,000 (the "Type B Debenture") at a per Unit price of
$25,000. The Type A Debenture is convertible into shares of the Company's Common
Stock at a conversion ratio of $.20 per share; and the Type B Debenture is
convertible into shares of the Company's Common Stock at a conversion ratio
equal to 85% of market prior to March 31, 1998 and 75% of market on or after
March 31, 1998. The Type B Debentures are redeemable after March 31, 1998 at a
premium of 125% of face value (see "Business - Financing Activities"). All of
the securities being offered in both the Type A and the Type B Private
Placements are unregistered. However, the 1,400,000 shares issuable upon
exercise of the Warrants, which form part of the Type B Units (the "Type B
Warrant Shares"), and the shares issuable upon conversion of the Type B
Debentures (the "Type B Conversion Shares") which, at 75% of current market
prices for the Company's Common Stock, would aggregate to an additional
4,166,666 shares, have registration rights and the Company has agreed to
register all of the Type B Warrant Shares and all of the Type B Conversion
Shares as promptly as practicable following the closing of the Type B Private
Placement. Neither the 850,000 shares of Company Common Stock included in the 85
Type A Units (the "Type A Shares") nor the 4,250,000 shares of Company Common
Stock issuable upon the conversion of the Type A Debentures (the "Type A
Conversion Shares") have any registration rights. All of the "Type A"
securities, therefore, may not be sold into the market for at least one year
following their purchase from the Company, To date, less than half of the Type A
Units and none of the Type B Units have been sold.
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In addition, the Company has outstanding common stock purchase warrants
which provide for the sale by the Company of an aggregate of: (i) 235,294 to an
unaffiliated consultant at an exercise price of $.17 per share; (ii) an
aggregate of 590,285 shares to three unaffiliated consultants at an exercise
price of $.187 per share (these options expire on October 4, 1998); (iii) an
aggregate of 250,000 shares to three unaffiliated individuals at an exercise
price of $.125 per share (these options expire on December 31, 1998); (iv)
250,000 shares to three unaffiliated individuals at an exercise price of $.1875
per share (these options expire on March 31, 1999); and (v) 250,000 to three
unaffiliated individuals at an exercise price of $.28 per share (these options
expire on June 30, 1998). The above described 590,285 shares issuable to three
consultants under options expiring on October 4, 1998, were issued for
consulting services and have been registered under a registration statement on
Form S-8, filed with the Commission on June 20, 1996 (Registration No.
333-5090). The shares issuable upon exercise of all other of the above described
options are either not eligible for registration under Form S-8 or, if eligible,
will not be registered because the Company has neither the obligation nor the
intention of doing so. There can be no assurance that any of the foregoing
options will be exercised prior to their respective expiration dates. Especially
in cases where the shares issuable upon exercise are not registered, there would
most likely have to be a rise in the market price of the Company's Common Stock
before such exercise occurs.
The Company also has presently outstanding options, the exercise prices of
which are tied to the market price of the Common Stock as at the time of
exercise. Principally, these include:
(i) an option, held by one outside director of the Company, to purchase
20,000 shares of convertible preferred stock at a price of $10 per
share (the "Preferred Option"). If purchased, such preferred stock
will be convertible into shares of the Company's Common Stock at a
conversion ratio equal to the number of shares of common stock
purchasable for the purchase price of each preferred share ($10) at
30% of the market price of the Common Stock at the time of
conversion. It is impossible for the Company to predict whether the
purchase of the preferred shares will occur or, if it does occur,
what the conversion ratio will be when such preferred shares are
converted to Common Stock. However, solely for the purposes of
illustration, using for a conversion ratio, one third of the average
of the closing bid prices of the Company's Common Stock during the
five-day period preceding January 26, 1998 ($0.224), each $10
Preferred Share would be convertible at a conversion ratio equal to
the number of shares of common stock purchasable for $.0672) per
share (148.8 shares) with the aggregate of 20,000 shares of
preferred stock convertible into a total of 2,976,190 shares.
Exercise of the Preferred Option would require a $200,000 investment
on the part of the holder thereof. To date, the Preferred Option has
not been exercised for any part of the preferred shares purchasable
thereunder and the Company is unable to state whether such option
shall ever be exercised; and
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<PAGE>
(ii) the CGT Option which, if all of the presently outstanding options
were exercised and all of the Company's presently outstanding stock
issuance obligations were effected, could be exercised for a total
of 7,058,925 shares.
Whether or not any of the above described securities are registered, the
holders of the convertible Debentures, the Warrants, and the outstanding options
would have an opportunity to profit from a rise in the market price of the
Common Stock, if such rise should occur, with a resulting dilution in the
interests of the other shareholders. Moreover, while the Company does not
believe that all of the above stock options will be exercised before they
expire, as noted above in Risk Factor No. 5. "Proposed Public Offering: Reverse
Split", if all of the options and stock issuance obligations which the Company
is presently bound to honor were to occur and, where market price is
determinative of the number of shares subject to such options or issuance
obligations, the current market price of the Company's Common Stock was used,
the number of shares of the Company's Common Stock issued and outstanding could
be as much as 70,598,253.
7. Dependence on Major Customer. To date the Company has received orders
for eleven TCS-1 Systems, eight of which were ordered by Ocean/Ventures III,
Inc.("O/V III") of Toms River, New Jersey ("O/V III") and one of which was
ordered by Oceans Tire Recycling & Processing Co., Inc. ("OTRP"). O/V III and
OTRP are New Jersey corporations affiliated with each other through common
control. The loss of either or both of these two customers would have an adverse
effect on the Company. See BUSINESS: "Dependence on Major Customer".
8. Control by Present Officers: Possible Depressive Effect. As of February
3, 1998, Terence C. Byrne, the Company's President and Chief Executive Officer,
owned of record, and controlled beneficially by way of irrevocable voting
proxies, 13,700,711 shares and Louis V. Muro owned of record 5,926,800 shares of
the Company's Common Stock. The Company is not aware of any other written or
oral voting agreements respecting the Company's Common Stock. Accordingly,
Messrs. Byrne and Muro collectively control an aggregate of 19,627,511, or
41.29%, of the currently issued and outstanding Common Stock of the Company.
They are therefore in a position to substantially influence the election of a
majority of the Company's directors and otherwise control the Company. In
addition, the concentration of ownership by the Company's officers and directors
may discourage potential acquirors from seeking control of the Company through
the purchase of Common Stock, and this possibility could have a depressive
effect on the price of the Company's Securities. See "Principal Shareholders"
and "Description of Securities."
9. Uncertainty of Product and Technology Development: Technological
Factors. The Company has not completed development and testing of the TCS-1
System. The Company's success will depend upon the TCS-1 System's meeting
targeted performance and cost objectives and its timely introduction into the
marketplace. The Company continues to be required to commit the bulk of its
time, effort, and resources to finalizing the development of the TCS-1 System.
Although the Company anticipates that the development of the TCS-1 System will
be successfully concluded by the end of March 1998, such an outcome will be
subject to all of the risks inherent in the development of a new product and
technology, including unanticipated
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<PAGE>
delays, expenses, and difficulties, as well as the possible insufficiency of
funding to complete development (see Risk Factor No.4 "Need for Substantial
Additional Capital", above). There can be no assurance as to when, or whether,
the Company's efforts to complete the development of the TCS-1 System will be
successful. In addition, there can be no assurance that the TCS-1 System will
satisfactorily perform the functions for which it is designed, that it will meet
applicable price or performance objectives, or that unanticipated technical or
other problems will not occur which would result in increased costs or material
delays in development. There can be no assurance that, despite testing by the
Company, problems will not be encountered in the TCS-1 System after the
commencement of commercial manufacture and sales, resulting in loss or delay in
market acceptance.
10. Patent Protection of Tirex Proprietary Technology and Potential
Infringement. The success of the Company's proposed business depends in part
upon its ability to protect its proprietary technology and the proposed TCS-1
System which will utilize such technology. On December 18, 1996, the Company
filed patent applications with the United States Patent and Trademark Office in
the United States and with the proper authorities in Canada. On October 23,
1997, the Patent Application was allowed by the United States Patent and
Trademark Office. Issuance of the patent is not subject to any further
contingencies and will be effected by the Patent and Trademark Office in
accordance with their scheduling requirements. Upon issuance of the US patent,
the examination papers will be submitted to the Canadian Patent Office for
review. The patent will cover the Company's disintegration technology. Because
the Company had previously filed "preliminary patent applications" on December
19, 1995, the priority date of its definitive patent application is retroactive
to such earlier date. Prior to obtaining its patent, the Company relied on trade
secrets, proprietary know-how and technological innovation to develop its
technology and the designs and specifications for the TCS-1 System. Except where
the terms of their employment agreements would make it redundant or, in the sole
discretion of management, it is determined that because of the non-technical
nature of their duties, such agreements are not necessary or appropriate, the
Company has, and will continue to, enter into confidentiality and invention
assignment agreements with all employees and consultants which limit access to,
and disclosure or use of, the Company's proprietary technology. There can be no
assurance, however, that the steps taken by the Company to deter
misappropriation or third party development of its technology and/or processes
will be adequate, that others will not independently develop similar technology
and/or processes or that secrecy will not be breached. In addition, although the
Company believes that its technology has been independently developed and does
not infringe on the proprietary rights of others, there can be no assurance that
the Company's technology does not and will not so infringe or that third parties
will not assert infringement claims against the Company in the future. Moreover,
there can be no assurance that the Company will be granted a patent pursuant to
its application or, that if a patent is granted, the Company will have the
resources to defend it by bringing patent infringement or other proprietary
rights actions.
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<PAGE>
11. Limited Public Market. To date there has been only a limited and
sporadic public market for the Company's Common Stock. There can be no assurance
that an active and reliable public market will develop or, if developed, that
such market will be sustained. Purchasers of the securities offered hereby may,
therefore, have difficulty in selling the shares of Common Stock issuable upon
the conversion of the Debentures or the exercise of the Warrants. As a result,
investors may find it impossible to liquidate their investment in the Company
should they desire to do so. The Company's Common stock is currently traded in
the over-the-counter market and quoted on the OTC Bulletin Board. The Company
expects to apply for inclusion in NASDAQ. As at the date hereof, however, the
Company is not eligible for inclusion in NASDAQ or for listing on any national
stock exchange. All companies applying and authorized for listing with NASDAQ
are required to have not less than $4,000,000 in total assets and $2,000,000 in
capital and surplus. Moreover, new proposed NASDAQ listing requirements, if
approved and adopted, will require a public float4 with a market value of not
less than five million dollars. Unless the Company is able to increase its net
worth and market valuation substantially, either through the accumulation of
surplus out of earned income or successful capital raising financing activities,
it will never be able to meet the eligibility requirements of NASDAQ. In order
to qualify for listing on a national stock exchange similar minimum criteria
respecting, among other things, the Company's net worth and/or income from
operation must be met. Accordingly, market transactions in the Company's common
stock are subject to the "Penny Stock Rules" of the Securities and Exchange Act
of 1934, which are discussed in more detail, below, under "Applicability of
Penny Stock Rules to Broker-Dealer Sales of Company Common Stock". These rules
could make it difficult to trade the Common Stock of the Company because
compliance with them can delay and/or preclude certain trading transactions.
This could have an adverse effect on the ability of an investor to sell any
shares of the Company's Common Stock being registered hereunder.
12. Applicability of "Penny Stock Rules" to Broker-Dealer Sales of Company
Common Stock. At the present time, the Company's Common Stock is not listed on
The Nasdaq Stock Market or on any Stock Exchange. Although dealer prices for the
Company's Common Stock are listed on the OTC Bulletin Board, trading has been
sporadic and limited since such quotations first appeared on April 4, 1994. See
"Market Information". The Company intends to apply to have its Common Stock
approved for quotation on the Nasdaq SmallCap Market at such time as it meets
the requirements for inclusion, which under current Nasdaq rules, require a
company to have, among other things, total assets of $4,000,000, net assets of
$2,000,000, a "public float" 5 valued at a least $1,000,000, and a minimum bid
price of $3.00 per share. However, Nasdaq is
- ----------
4 "Public float" is defined as shares that are not held directly or
indirectly by any officer or director of the issuer and by any other
person who is the beneficial owner of more than 10 percent of the total
shares outstanding.
5 Public float is defined as shares that are not held directly or indirectly
by any officer or director of the issuer and by any other person who is
the beneficial owner of more than 10 percent of the total shares
outstanding.
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currently considering adopting new standards which would require that a company
have net tangible assets of $4,000,000 or meet certain income tests, a public
float valued at $5,000,000, and a minimum bid price of $4. At the present time,
the Company is unable to state when, if ever, it will meet the Nasdaq
application standards. Moreover, even if the Company meets the minimum
requirements to apply for inclusion in The Nasdaq SmallCap Market, there can be
no assurance, that approval will be received or, if received, that the Company
will meet the requirements for continued listing on the SmallCap Market.
Further, Nasdaq reserves the right to withdraw or terminate a listing on the
Nasdaq SmallCap Market at any time and for any reason in its discretion. If the
Company is unable to obtain or to maintain a listing on the Nasdaq SmallCap
Market, quotations, if any, for "bid" and "asked" prices of the Common Stock
would be available only in the "pink sheets" published by the National Quotation
Bureau, Inc. or on the OTC Bulletin Board where the Common Stock has currently
quoted. This can result in an investor's finding it more difficult to dispose of
or to obtain accurate quotations of prices for the Common Stock than would be
the case if the Common Stock were quoted on the Nasdaq SmallCap Market.
Irrespective of whether or not the Common Stock is included in the Nasdaq
system, there is no assurance that the public market for the Common Stock will
become more active or liquid in the future. In that regard, prospective
purchasers should consider that this offering is being made without underwriting
arrangements typically found in an initial public offering of securities. Such
arrangements generally provide for the issuer of the securities to sell the
securities to an underwriter which, in turn, sells the securities to its
customers and other members of the public at a fixed offering price, with the
result that the underwriter has a continuing interest in the market for such
securities following the offering.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a "penny stock". Commission regulations generally
define a penny stock to be an equity security that has a market price of less
than $5.00 per share and is not listed on The Nasdaq Stock Market or a major
stock exchange. These regulations subject all broker-dealer transactions
involving such securities to the special "Penny Stock Rules" set forth in Rule
15g-9 of the Securities Exchange Act of 1934 (the "34 Act"). It may be necessary
for the Selling Shareholder to utilize the services of broker-dealers who are
members of the NASD. The current market price of the Company's Common Stock is
substantially less than $5 per share and such stock can, for at least for the
foreseeable future, be expected to continue to trade in the over-the-counter
market at a per share market price of less than $5 (see "Market Information").
Accordingly, any broker-dealer sales of the shares being registered hereunder,
as well as any subsequent market transactions in the Company's Common Stock,
will be subject to the Penny Stock Rules. These Rules affect the ability of
broker-dealers to sell the Company's securities and also may affect the ability
of purchasers in this offering to sell their shares in the secondary market, if
such a market should ever develop.
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<PAGE>
The Penny Stock Rules also impose special sales practice requirements on
broker-dealers who sell such securities to persons other than their established
customers or "Accredited Investors." Among other things, the Penny Stock Rules
require that a broker-dealer make a special suitability determination respecting
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. In addition, the Penny Stock Rules require that a
broker-dealer deliver, prior to any transaction, a disclosure schedule prepared
in accordance with the requirements of the Commission relating to the penny
stock market. Disclosure also has to be made about commissions payable to both
the broker-dealer and the registered representative and the current quotations
for the securities. Finally, monthly statements have to be sent to any holder of
such penny stocks disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks.
Accordingly, for so long as the Penny Stock Rules are applicable to the
Company's Common Stock, it will be difficult to trade such stock because
compliance with such Rules can delay and/or preclude certain trading
transactions. This could have an adverse effect on the liquidity and/or price of
the Company's Common Stock.
13. Experience of Management. Although Management has general business and
engineering experience, potential investors should be aware that no member of
management has been directly involved in administering a tire disintegration,
recycling, or tire disintegration equipment manufacturing, business.
14. Dependence on Key Personnel. The Company believes that its success
depends to a significant extent on the efforts and abilities of certain of its
senior management, in particular those of Terence C. Byrne, President and Chief
Executive Officer; and Louis V. Muro, Vice President in charge of Engineering.
The loss of Mr. Byrne, or Mr. Muro could have a material adverse affect on the
Company's business, prospects, operating results, and financial condition. The
Company does not presently have key man life insurance policies, but intends to
try to obtain such coverage in the amount of $1,000,000 for Mr. Byrne and
$500,000 for Mr. Muro. There can be no assurance that such policies will be
available to the Company on commercially reasonably terms, if at all.
Additional, the ability of the Company to realize its business plan could be
jeopardized if any of its senior management becomes incapable of fulfilling his
obligations to the Company and a capable successor is not found on a timely
basis. There can however be no assurance that, in such event, the Company will
be able to locate and retain a capable successor to any member of its senior
management.
15. Regulatory and Environmental Considerations. The Company does not
expect that its equipment manufacturing operations will be subject to any
unusual or burdensome governmental regulations. However, the Company is
currently making preparations to enter into a five-year tire shredding project
in Quebec (see "Proposed Tire Shredding Operations"). These operations and the
businesses of the Company's customers may involve, to varying degrees and for
varying periods of time, the storage or "stockpiling" of scrap tires which, with
their size, volume and composition, can pose a particularly serious
environmental problem. Among the numerous problems relating to stockpiling scrap
tires, is the fact that when stockpiled above ground, tires create serious fire,
public health, and environmental hazards ranging from fires,
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which generate large and dense clouds of black smoke and are extremely difficult
to extinguish, to the creation of vast breeding grounds for mosquitoes and
vermin. As a result, many states have either passed or have pending legislation
regarding discarded tires including legislation limiting the storage of used
tires to specifically designated areas. For reasons including, but not limited
to the problems described above, the Company and the purchasers of its TCS-1
Systems will be subject to various local, state, and federal laws and
regulations including, without limitation, regulations promulgated by federal
and state environmental, health, and labor agencies. Compliance with applicable
environmental and other laws and regulations governing the business of the
Company may impose a financial burden upon the Company that could adversely
affect its business, financial condition, prospects, and results of operations.
Likewise, the burden of compliance with laws and regulations governing the
installation and/or operation of TCS-1 Systems could discourage potential
customers from purchasing a TCS-1 System which would adversely affect the
Company's business, prospects, results, and financial condition. Actions by
federal, state, and local governments concerning environmental or other matters
could result in regulations that could increase the cost of producing the
recyclable rubber, steel, and fiber which are the by-products from the operation
of the TCS-1 System and make such by-products less profitable or even impossible
to sell at an economically feasible price level.
The Company believes that it will be able to operate in compliance with
such regulations. In this regard, it has retained environmental attorneys in
Montreal to advise it with respect to compliance with local environmental
regulations applicable to its proposed tire shredding operations. It has also
engaged a consultant to advise purchasers of its TCS-1 Systems with respect to
compliance with local environmental regulations applicable to the installation
and operation of the TCS-1 System. To date, the Company has not had to make
significant capital expenditures relating to environmental compliance because it
has not yet commenced operations. However, the inception of equipment
manufacturing and, possibly, tire shredding operations together with continually
changing compliance standards and technology, may affect the Company's future
capital expenditure requirements relating to environmental compliance. See
PROPOSED BUSINESS.
16. Production and Supply. The Company intends to begin manufacturing the
TCS-1 System on a commercial basis within the current fiscal year. The Company
will be dependent on arrangements with its subcontractors for the manufacture
and assembly of the principal components incorporated into the TCS-1 System (see
BUSINESS "Agreements With Subcontractors", below). It will therefore be
substantially dependent on the ability of such subcontractors to satisfy
performance and quality specifications and to dedicate sufficient production
capacity for all TCS-1 System scheduled delivery dates. The Company believes
that all of its subcontractors have the requisite manufacturing capabilities and
the willingness to dedicate sufficient amounts of their manufacturing capacity
to allow the Company to meet all TCS-1 System delivery dates, currently
scheduled or expected to be scheduled within the next two years. However, no
assurance can be given that this will in fact be the case and failure on the
part of the Company's subcontractors in these regards would adversely affect the
Company's ability to manufacture and deliver TCS-1 Systems on a timely and
competitive basis. In such event the Company would have to replace or supplement
its present subcontractors. There can
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<PAGE>
be no assurance that should it be necessary to do so, the Company would be able
to find capable replacements for its subcontractors on a timely basis and on
terms beneficial to the Company, if at all; The Company's inability to do so
would have a material adverse effect on its business (see BUSINESS: "Production
and Supply").
Components of the TCS-1 Systems, which are not manufactured by the
Company's subcontractors specifically for the TCS-1 System, will be purchased,
either directly by the Company or indirectly through its subcontractors from
third-party manufacturers. The Company believes that numerous alternative
sources of supply for all such components are readily available.
17. Technological Changes. To date, the market for tire disintegration
equipment has not, to the best of management's knowledge, been characterized by
rapid changes in technology. However, there can be no assurance that new
products or technologies, presently unknown to the Company, will not, at any
time in the future and without warning, render the Company's tire disintegration
technology less competitive or even obsolete. Moreover, the technology upon
which the Company's tire disintegration system is based, could be susceptible to
being analyzed and reconstructed by an existing or potential competitor.
Although the Company has filed a patent application respecting its proprietary
disintegration system, there cannot, at this time be any guarantee that a patent
will, in fact, be granted pursuant to such application. Moreover, even in the
event that the Company is granted a patent, the Company may not have the
financial resources to successfully defend such patent by bringing patent
infringement suits against parties that have substantially greater resources
than are available to the Company. The Company must continue to create
innovative new products reflecting technological changes in design, engineering,
and development, not only of new tire disintegration machinery, but of products,
and machinery capable of producing products, which incorporate and recycle the
rubber, steel, and/or fiber by-products which will be produced by the operation
of the TCS-1 System. Failure to do so, could prevent to Company from gaining and
maintaining a significant market for its products. This may require a continuing
high level of product development, innovation, and expenditures. To the extent
that the Company does not respond adequately to such technological advances, its
products may become obsolete and its growth and profitability may be adversely
affected.
18. Competition. Although management believes that the Tirex Technology
has distinct advantages over other existing tire disintegration methods, the
Company will face competition from other equipment manufacturers, virtually all
of whom will be larger than the Company, and will have substantially more assets
and resources than the Company has. Management intends to meet such competition
by developing technological innovations which will make the TCS-1 System more
economical and efficient than other tire disintegration methods. To do so, the
Company will have to raise sufficient funding to complete and continue its
development program and to employ highly qualified personnel. There cannot
however be any assurance that the Company will be able to raise the capital
necessary to enable it to do so or that it will be able to locate or retain such
personnel.
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19. Liability Insurance. The proposed TCS-1 System may expose the Company
to possible product liability claims if, among other things, the operation of
the TCS-1 System results in personal injury, death or property damage. There can
be no assurance the Company will have sufficient resources to satisfy any
liability resulting from such claims or will be able to cause its component
suppliers or customers to indemnify or insure the Company against such claims.
The Company does not presently intend to obtain product liability insurance
prior to the commencement of commercial operation of the TCS-1 System. Should
the Company determine that such insurance is required, there can be no assurance
that affordable insurance coverage will be available in terms and scope adequate
to protect the Company against material adverse effects in the event of a
successful claim.
20. No Dividends and None Anticipated. The Company has not paid any cash
dividends, nor does it contemplate or anticipate paying any dividends upon its
Common Stock in the foreseeable future.
21. Authorization of Preferred Stock. The Company's Amended Certificate of
Incorporation authorizes the issuance of "open" stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to designate and issue the "open" stock as preferred stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of the Company's
Convertible Debentures, Warrants, and Common Stock. Also, the voting power and
percentage of stock ownership of the shareholders of the Company's outstanding
capital stock can be substantially diluted by such preferred stock issuance. In
addition, the issuance of such preferred stock may have the effect of rendering
more difficult or discouraging an acquisition of the Company or changes in
control of the Company. The Company does not have any provisions in its
Certificate of Incorporation which would have an anti-takeover effect. However,
certain provisions in the employment agreements of certain of the Company's
officers could have such effect. Moreover, the Company may adopt anti-takeover
measures in the future. Such measures could include, but may not necessarily be
limited to, the issuance of preferred stock with anti-takeover provisions to
discourage bidders from making offers at a premium to the market price. In
addition, the mere existence of an anti-takeover device could have a depressive
effect on the market price of the Company's Common Stock.
21
<PAGE>
SELLING SHAREHOLDER
The 475,303 shares of common stock (the "Shares") being offered hereunder
by the Selling Shareholder were acquired by him on January 30, 1995, pursuant to
the terms of his employment agreement, dated January 18, 1995, as amended May
30, 1996 (the "Byrne Employment Agreement") for services rendered to the Company
prior the date of the said Employment Agreement and in consideration for his
entering into such Employment Agreement. The Byrne Employment Agreement is an
individually negotiated written compensation agreement pursuant to which the
Selling Shareholder rendered bona fide services not in connection with the offer
or sale of securities in a capital raising transaction. Such agreement
constitutes an Employee Benefit Plan, as defined in Rule 405 of the Securities
Act of 1933. The Byrne Employment Agreement may sometimes be referred to
hereinafter as the "Plan". For purposes of this Reoffer Prospectus, all of the
Shares being registered hereunder are "control shares" insofar as they were
issued under an employee benefit plan pursuant to a Securities Act exemption
prior to their inclusion in a registration statement on Form S-8, of which this
Reoffer Prospectus is a part.
The table which follows identifies: (i) the Selling Shareholder ; (ii) the
Plan pursuant to which the Shares being offered hereby have been acquired; (iii)
the nature of all positions, offices or other material relationships which the
Selling Shareholder has had with the Company within the past three years; (iv)
the number of shares of common stock owned by the Selling Shareholder prior to
the offering; (v) the number of shares of common stock to be offered for the
account of the Selling Shareholder; (vi) the number of shares of common stock to
be owned by the Selling Shareholder after the completion of the offering, and
(vii) the percentage of the Company's common stock to be owned by the Selling
Shareholder after completion of the offering.
22
<PAGE>
<TABLE>
<CAPTION>
Number of Number of Percentage
Position Shares Owned Number of Shares Owned of Shares
Compensation Agreement With Prior to Shares After the Owned After
Selling Shareholder (Name of Plan) Company Offering Offered Offering the Offering
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Terence C. Byrne Executive Agreement of January 18, President, CEO, 13,606,711(1) 475,303 13,606,711(1) 28.82% (2)
1995, as amended May 30, 1996 and Director
====================================================================================================================================
</TABLE>
(1) Includes: (i) 7,701,695 shares held of record by Mr. Byrne as of March 9,
1998; (ii) 227,328 shares held of record by Mr. Byrne's wife, Darla Sapone
Byrne, over which shares Mr. Byrne has voting power pursuant to an irrevocable
proxy granted to him on September 27, 1996; (iii) 446,596 shares held of record
by John W. Surgent, over which shares Mr. Byrne has voting power pursuant to an
irrevocable proxy granted to him on June 13, 1996; and (iv) 5,231,092, shares
held of record by The Nais Corporation over which shares Mr. Byrne has voting
power pursuant to an irrevocable proxy granted to him in June of 1997.
(2) Based upon 47,644,182 shares issued and outstanding on March 16, 1998.
23
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholder has not offered or sold any shares of the
Company's Common Stock pursuant to a registration statement on Form S-8 within
the three-month period preceding the date hereof. The number of shares offered
hereunder by the Selling Shareholder represents less than one percent of the
total number of shares of the Company's common stock presently issued and
outstanding. The Selling Shareholder may sell all or part of the shares, from
time to time, in the over-the-counter market, or in such other public market for
the Company's common stock as may develop, at market prices then pertaining. In
connection therewith the Selling Shareholder may utilize the services of Donald
& Co. Securities, Inc., 788 Shrewsbury Avenue, Tinton Falls, NJ 07724, or
another broker-dealer, none of whom will act as underwriters with respect to
sales of the Shares. The names of any such brokers-dealers, who have not yet
been identified, will be set forth in a supplement to this Reoffer Prospectus,
to the extent required.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of seventy million
shares (70,000,000), par value $.001 per share, of which sixty-nine million,
nine hundred thousand (69,900,000) shares are designated Common Stock par value
$.001 per share, and one hundred thousand (100,000) shares are designated Open
Stock, par value $.001 per share. There are presently forty-seven million, five
hundred thirty thousand, three hundred fifty-eight (47,644,182) shares of Common
Stock issued and outstanding. The Open Stock may be issued from time to time, in
one or more classes, or one or more series within any class thereof, in any
manner permitted by law, as determined from time to time by the Company's board
of directors, and stated in the resolution or resolutions providing for the
issuance of such shares adopted by the Company's board of directors pursuant to
authority vested in it in the Company's Certificate of Incorporation, each class
or series to be appropriately designated, prior to the issuance of any shares
thereof, by some distinguishing letter, number designation or title. All shares
of stock in such classes or series may be issued for such consideration and have
such voting powers, full or limited, or no voting powers, and shall have such
designations, preferences and relative, participating, optional, or other
special rights, and qualifications, limitations or restrictions thereof,
permitted by law, as shall be stated and expressed in the resolution or
resolutions, providing for the issuance of such shares adopted by the Company's
board of directors pursuant to authority vested in the Company's Certificate of
Incorporation. The number of shares of stock of any class or series within any
class, so set forth in such resolution or resolutions may be increased (but not
above the total number of authorized shares) or decreased (but not below the
number of shares thereof then outstanding) by further resolution or resolutions
adopted by the Company's board of directors pursuant to authority vested in it
in the Company's Certificate of Incorporation.
24
<PAGE>
The Company's board of directors may determine the times when, the terms
under which and the consideration for which the Company shall issue, dispose of
or receive subscriptions for its shares, including treasury shares, or acquire
its own shares. The consideration for the issuance of the shares shall be paid
in full before their issuance and shall not be less than the par value per
share. Upon payment of such consideration, such shares shall be deemed to be
fully paid and nonassessable by the Company.
The holders of shares of Common Stock are entitled to dividends when and
as declared by the Board of Directors from funds legally available therefore
and, upon liquidation, are entitled to share pro rata in any distribution to
shareholders. Holders of the Common Stock have one non-cumulative vote for each
share hold. There are no pre-emptive, conversion or redemption privileges, nor
sinking fund provisions, with respect to the Common Stock.
Stockholders are entitled to one vote of each share of Common Stock held
of record on matters submitted to a vote of stockholders. The Common Stock does
not have cumulative voting rights. As a result, the holders of more than 50% of
the shares of Common Stock voting for the election of directors can elect all of
the directors if they choose to do so, and, in such event, the holders of the
remaining shares of Common Stock will not be able to elect any person or persons
to the board of directors of the Company.
EXPERTS
The financial statements and schedules of the Company and its subsidiaries
included in the Company's Annual Report on Form 10-K, for the fiscal year ended
June 30, 1997, which is incorporated herein by reference, have been examined by
Nevoso, Pivirotto, Pinkham & Foster, Certified Public Accountants, LLC, and such
financial statements and reports are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Shares offered hereby has been passed upon for the
Company by Frances Katz Levine, Esq., 621 Clove Road, Staten Island, NY 10310.
Ms. Levine, serves as corporate and securities counsel to the Company. Ms.
Levine is the record and beneficial owner of approximately 6.9% of the Company's
issued and outstanding common stock.
INDEMNIFICATION
The Company's certificate of incorporation provides for indemnification to
the fullest extent permitted by Section 145 of the Delaware General Corporation
Law ("Section 145"). Pursuant thereto, the Company indemnifies its officers,
directors, employees and agents to the fullest extent permitted for losses and
expenses incurred by them in connection with actions in
25
<PAGE>
which they are involved by reason of their having been directors, officers,
employees, or agents of the Company. Section 145 permits a corporation to
indemnify any person who is or has been a director, officer, employee, or agent
of the corporation or who is or has been serving as a director, officer,
employee or agent of another corporation, organization, or enterprise at the
request of the corporation, against all liability and expenses (including but
not limited to attorneys' fees and disbursements and amounts paid in settlement
or in satisfaction of judgments or as fines or penalties) incurred or paid in
connection with any action, suit or proceeding, whether civil, criminal,
administrative, investigative, or otherwise, in which he or she may be involved
by reason of the fact that he or she served or is serving in these capacities,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no cause o believe his or her
conduct was unlawful. In the case of a claim, action, suit or proceeding made or
brought by or in the right of the corporation to procure a recovery or judgment
in its favor, the corporation shall not indemnify such person in respect of any
claim issue or matter as to which such person has been adjudged to be liable to
the corporation for negligence or misconduct int he performance of his or her
duty to the corporation, except for such expenses as the Court may allow. Any
such person who has been wholly successful on the merits or otherwise with
respect to any such claim, action, suit or proceeding or with respect to any
claim, issue or matter therein, shall be indemnified as of right against all
expenses in connection therewith or resulting therefrom. The effect of this
provision in the certificate of incorporation is to eliminate the rights of the
Registrant and its stockholders (through stockholders' derivative suits on
behalf of the Registrant) to recover monetary damages against a director for
breach of fiduciary duty as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described
above.
The Company's By-laws provide for indemnification of the Company's
officers and directors against all liabilities (including reasonable costs,
expenses, attorney's fees, obligations for payment in settlement and final
judgment) incurred by or imposed upon them in the preparation, conduct or
compromise of any actual or threatened action, suit, or proceeding, whether
civil, criminal, or administrative, including any appeals therefrom and any
collateral proceedings in which they shall be involved by reason of any action
or omission by them in their capacity as a director or officer of the Company,
or of any other corporation which they serve as a director or officer at the
request of the Company, whether or not such person is a director or officer at
the time such liabilities are incurred or any such action, suit, or proceeding
is commenced against them. The indemnification provided by the By-laws does not
extend, however, to certain situations involving misconduct, willful
misfeasance, bad faith, or gross negligence.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Company pursuant to the foregoing provisions, the Company has been informed
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 registrant of expenses incurred in
the successful defense of any action,
26
<PAGE>
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, 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.
Except to the extent hereinabove set forth, there is no charter provision,
by-law, contract, arrangement or statute pursuant to which any director or
officer of registrant is indemnified in any manner against any liability which
he may incur in his capacity as such.
27
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents are incorporated by reference in this registration
statement.
(a) Registrant's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997, filed pursuant to Section 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
(b) Registrant's quarterly reports on Forms 10-QSB for the fiscal quarters
ended September 30, 1997 and December 31, 1997, filed pursuant to Section
15(d) of the Exchange Act, and Registrant's Current Reports on Form 8-K,
dated July 11, 1998, (filed with the Commission on August 13, 1998) and
dated February 3, 1998 (filed with the Commission on February 17, 1998.
All documents filed by the Registrant pursuant to Section 13(a), 13(c),
14, and 15(d) of the Securities Act and Sections 13(a), 13(c), and 14 of the
Exchange Act after the date of this registration statement and prior to the
filing of a post-effective amendment to this registration statement which
indicates that all securities offered hereunder have been sold, or which
deregisters all securities then remaining unsold under this registration
statement, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
The authorized capital stock of Registrant consists of seventy million
shares (70,000,000), par value $.001 per share, of which sixty-nine million,
nine hundred thousand (69,900,000) shares are designated Common Stock par value
$.001 per share, and one hundred thousand (100,000) shares are designated Open
Stock, par value $.001 per share. The Open Stock may be issued from time to
time, in one or more classes, or one or more series within any class thereof, in
any manner permitted by law, as determined from time to time by Registrant's
board of directors, and stated in the resolution or resolutions providing for
the issuance of such shares adopted by Registrant's board of directors pursuant
to authority vested in it in Registrant's Certificate of Incorporation, each
class or series to be appropriately designated, prior to the issuance of any
shares thereof, by some distinguishing letter, number designation or title. All
shares of stock in such classes or series may be issued for such consideration
and have such voting powers, full or limited, or no voting powers, and shall
have such designations, preferences and relative, participating, optional, or
other special rights, and qualifications, limitations or restrictions thereof,
permitted by law, as shall be stated and expressed in the resolution or
resolutions,
28
<PAGE>
providing for the issuance of such shares adopted by Registrant's board of
directors pursuant to authority vested in Registrant's Certificate of
Incorporation. The number of shares of stock of any class or series within any
class, so set forth in such resolution or resolutions may be increased (but not
above the total number of authorized shares) or decreased (but not below the
number of shares thereof then outstanding) by further resolution or resolutions
adopted by Registrant's board of directors pursuant to authority vested in it in
Registrant's Certificate of Incorporation.
Registrant's board of directors may determine the times when, the terms
under which and the consideration for which Registrant shall issue, dispose of
or receive subscriptions for its shares, including treasury shares, or acquire
its own shares. The consideration for the issuance of the shares shall be paid
in full before their issuance and shall not be less than the par value per
share. Upon payment of such consideration, such shares shall be deemed to be
fully paid and nonassessable by Registrant.
The holders of shares of Common Stock are entitled to dividends when and
as declared by the Board of Directors from funds legally available therefore
and, upon liquidation, are entitled to share pro rata in any distribution to
shareholders. Holders of the Common Stock have one non-cumulative vote for each
share hold. There are no pre-emptive, conversion or redemption privileges, nor
sinking fund provisions, with respect to the Common Stock.
Stockholders are entitled to one vote of each share of Common Stock held
of record on matters submitted to a vote of stockholders. The Common Stock does
not have cumulative voting rights. As a result, the holders of more than 50% of
the shares of Common Stock voting for the election of directors can elect all of
the directors if they choose to do so, and, in such event, the holders of the
remaining shares of Common Stock will not be able to elect any person or persons
to the board of directors of Registrant.
Item 5. Interest of Named Experts and Counsel.
Frances Katz Levine, counsel to the Registrant, is employed by Registrant
as its corporate and securities counsel. She resigned her positions as a
director and as Secretary of the Registrant on December 22, 1996. Her
resignation was not caused by any disagreement with the Registrant on any matter
relating to the Registrant's operations, policies, or practices. Ms. Levine is
the record and beneficial owner of approximately 6.9% of the Registrant's issued
and outstanding common stock.
Item 6. Indemnification of Directors and Officers.
The Company's certificate of incorporation provides for indemnification to
the fullest extent permitted by Section 145 of the Delaware General Corporation
Law ("Section 145"). Pursuant thereto, the Company indemnifies its officers,
directors, employees and agents to the
29
<PAGE>
fullest extent permitted for losses and expenses incurred by them in connection
with actions in which they are involved by reason of their having been
directors, officers, employees, or agents of the Company. Section 145 permits a
corporation to indemnify any person who is or has been a director, officer,
employee, or agent of the corporation or who is or has been serving as a
director, officer, employee or agent of another corporation, organization, or
enterprise at the request of the corporation, against all liability and expenses
(including but not limited to attorneys' fees and disbursements and amounts paid
in settlement or in satisfaction of judgments or as fines or penalties) incurred
or paid in connection with any action, suit or proceeding, whether civil,
criminal, administrative, investigative, or otherwise, in which he or she may be
involved by reason of the fact that he or she served or is serving in these
capacities, if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no cause
o believe his or her conduct was unlawful. In the case of a claim, action, suit
or proceeding made or brought by or in the right of the corporation to procure a
recovery or judgment in its favor, the corporation shall not indemnify such
person in respect of any claim issue or matter as to which such person has been
adjudged to be liable to the corporation for negligence or misconduct int he
performance of his or her duty to the corporation, except for such expenses as
the Court may allow. Any such person who has been wholly successful on the
merits or otherwise with respect to any such claim, action, suit or proceeding
or with respect to any claim, issue or matter therein, shall be indemnified as
of right against all expenses in connection therewith or resulting therefrom.
The effect of this provision in the certificate of incorporation is to eliminate
the rights of the Registrant and its stockholders (through stockholders'
derivative suits on behalf of the Registrant) to recover monetary damages
against a director for breach of fiduciary duty as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described above.
The Company's By-laws provide for indemnification of the Company's
officers and directors against all liabilities (including reasonable costs,
expenses, attorney's fees, obligations for payment in settlement and final
judgment) incurred by or imposed upon them in the preparation, conduct or
compromise of any actual or threatened action, suit, or proceeding, whether
civil, criminal, or administrative, including any appeals therefrom and any
collateral proceedings in which they shall be involved by reason of any action
or omission by them in their capacity as a director or officer of the Company,
or of any other corporation which they serve as a director or officer at the
request of the Company, whether or not such person is a director or officer at
the time such liabilities are incurred or any such action, suit, or proceeding
is commenced against them. The indemnification provided by the By-laws does not
extend, however, to certain situations involving misconduct, willful
misfeasance, bad faith, or gross negligence.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Company pursuant to the foregoing provisions, the Company has been informed
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
30
<PAGE>
(other than the payment by registrant of expenses incurred 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,
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.
Except to the extent hereinabove set forth, there is no charter provision,
by-law, contract, arrangement or statute pursuant to which any director or
officer of registrant is indemnified in any manner against any liability which
he may incur in his capacity as such.
Item 7. Exemption From Registration Claimed.
The 475,303 shares of common stock (the "Shares") being offered hereunder
by the Selling Shareholder was acquired by him pursuant to the terms of his
employment agreement, dated January 18, 1995, as amended May 30, 1996 (the
"Byrne Employment Agreement"). The Byrne Employment Agreement is an individually
negotiated written compensation agreement pursuant to which the Selling
Shareholder rendered bona fide services not in connection with the offer or sale
of securities in a capital raising transaction. Such agreement constituted an
Employee Benefit Plan, as defined in Rule 405 of the Securities Act of 1933. The
Byrne Employment Agreement is sometimes referred to hereinafter as the "Plan".
For purposes of this Reoffer Prospectus, all of the Shares being registered
hereunder are "control shares" insofar as they were issued under an employee
benefit plan pursuant to a Securities Act exemption prior to their inclusion in
a registration statement on Form S-8, of which this Reoffer Prospectus is a
part.
With respect to the issuance of the Shares:
(i) Registrant did not engage in general advertising or general solicitation
and paid no commission or similar remuneration, directly or indirectly,
with respect to such transactions.
(ii) The Selling Shareholder was, at the time of acquisition, an executive
officer and director of Registrant; As such, he had continuing direct
access to all relevant information concerning the Registrant and was
therefore completely knowledgeable with respect to the affairs of
Registrant.
(iii) The Selling Shareholder advised Registrant that the Shares were purchased
for investment and without a view to their resale or distribution unless
subsequently registered and acknowledged that they were aware of the
restrictions on resale of the Shares absent subsequent registration and
that an appropriate legend would be placed on the certificates evidencing
the Shares reciting the absence of their registration under the Act and
referring to the restrictions on their transferability and resale.
31
<PAGE>
(iv) The Selling Shareholder has such knowledge and experience in financial and
business mattes that he is capable of evaluating the merits and risks of
such investment and is able to bear the economic risk thereof.
Accordingly, Registrant claims the transaction hereinabove described, to
have been exempt from the registration requirements of Section 5 of the Act by
reason of Section 4(2) thereof in that such transactions did not involve a
public offering of securities.
Item 8. Exhibits.
The exhibits filed as a part of this Report or incorporated herein by
reference are as follows:
Exhibits Incorporated
Herein By Reference,
Exhibit No. As Filed With
Document Indicated
4.1 Executive Agreement, dated Jan 18, 1995, 10(rr)
between Registrant and Terence C. Byrne (1)
4.2 Amendment No. 1, dated May 30, 1996, to Executive 4.7
Agreement, dated Jan 18, 1995, between Registrant
and Terence C. Byrne (2)
5.1 Opinion of Frances Katz Levine, Esq., regarding
the legality of the securities being
registered under this Registration Statement.
24.1 Consent of Nevoso, Pivirotto, Pinkham & Foster,
Certified Public Accountants, LLC Independent
Auditors for the Registrant.
24.2 Consent of Frances Katz Levine, Esq., counsel for
the Registrant (set forth in the opinion of
counsel included as Exhibit 5.1).
- ----------
(1) Filed with the Securities and Exchange Commission as an exhibit, numbered as
indicated above, to Registrant's annual report on Form 10-KSB for the fiscal
year ended June 30, 1995, which exhibits are incorporated herein by reference.
32
<PAGE>
(2) Filed with the Securities and Exchange Commission on July 22, 1996 as an
exhibit, numbered as indicated above, to the registration statement of
Registrant on Form S-8, File No. 33-5310, which exhibits are incorporated herein
by reference.
Item 9. 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 reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(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 section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities
33
<PAGE>
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 under 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 in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of 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.
34
<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-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ville St. Laurent, Province of Quebec, Canada, on the
16th day of March 1998.
THE TIREX CORPORATION
By /s/ Terence C. Byrne
------------------------------
Terence C. Byrne, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Terence C. Byrne President, Chief March 16, 1998
- ----------------------------- Executive Officer and
Terence C. Byrne Chief Financial Officer
/s/ Louis V. Muro Vice President in March 16, 1998
- ----------------------------- Charge of Engineering
Louis V. Muro
/s/ John L. Threshie, Jr. Secretary and Vice March 16, 1998
- ----------------------------- President of Operations
John L. Threshie, Jr.
35
<PAGE>
A Majority of the Board of Directors
/s/ Terence C. Byrne Director March 16, 1998
- -----------------------------
Terence C. Byrne
/s/ Louis V. Muro Director March 16, 1998
- -----------------------------
Louis V. Muro
/s/ John L. Threshie, Jr. Director March 16, 1998
- -----------------------------
John L. Threshie, Jr.
/s/ John G. Hartley Director March 16, 1998
- ------------------------
John G. Hartley
36
EXHIBIT 5.1
OPINION OF
FRANCES KATZ LEVINE, ESQ.
<PAGE>
FRANCES KATZ LEVINE
Counselor at Law
621 CLOVE ROAD
STATEN ISLAND, NY 10310
Member, New York and Telephone (718) 981-8485
New Jersey Bars Telefax (718) 447-1153
March 16, 1998
Tirex America Inc.
3767 Thimens, Suite 207
Ville St. Laurent, Quebec
Canada H4R 1W4
Ladies and Gentlemen:
You have requested my opinion as counsel for Tirex America Inc., a
Delaware corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, and the Rules and Regulations
promulgated thereunder, and the public offering by the selling shareholders (the
"Selling Shareholders") named in the Company's Registration Statement on Form
S-8, to be filed with the Securities and Exchange Commission on or about March
18, 1998 (the "Registration Statement"), of four hundred seventy-five thousand,
three hundred and three (475,303) shares of Common Stock of the Company, $.001
par value, per share, currently issued and outstanding in the names of the
Selling Shareholders (the "Shares").
I have examined the Registration Statement in the form to be filed with
the Securities and Exchange Commission, the Certificate of Incorporation of the
Company as certified by the Secretary of State of the State of Delaware, the
Bylaws and the minute books of the Company as a basis for the opinion hereafter
expressed.
Based on the foregoing examination, it is my opinion, and I so advise,
that the 475,303 Shares currently are, and upon sale in the manner described in
the Registrant Statement will be, legally issued, fully paid and nonassessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Frances Katz Levine
EXHIBIT 24.1
CONSENT OF NEVOSO, PIVIROTTO, PINKHAM & FOSTER
Certified Public Accountants, LLC
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Nevoso, Pivirotto, Pinkham & Foster
CERTIFIED PUBLIC ACCOUNTANTS, LLC
Report of Independent Auditors
We consent to the incorporation by reference in this Registration Statement of
Tirex America Inc. on Form S-8 of our report dated October 9, 1997, appearing in
the incorporated by reference from the Annual Report on Form 10-KSB of The Tirex
Corporation for the year ended June 30, 1997.
Nevoso, Pivirotto, Pinkham & Foster
Certified Public Accountants, LLC
March 16, 1998
Fairfield, New Jersey
