As filed with the Securities and Exchange Commission on August 25, 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)
EMPLOYMENT AGREEMENT
BETWEEN REGISTRANT AND:
SCOTT RAPFOGEL
(Full title of the Plan)
Frances Katz Levine
621 Clove Road
Staten Island, NY 10310
(Name and address, including zip code of agent for service)
(718) 981-8485
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================
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
Scott Rapfogel 95,057 $.20 $19,011.40 $ 5.76
- ----------------------------------------------------------------------------------------------
TOTAL 95,057 $.20 $19,011.40 $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 August 21, 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
- --------------------------------------------------------------------------------
95,057 Shares
----------
THE TIREX CORPORATION
Common Stock
$.001 Par Value
----------
The shares of common stock offered hereby (the "Shares") are being sold by
Scott Rapfogel, a shareholder of The Tirex Corporation (the "Company"); Mr.
Rapfogel 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 August 21, 1998, the high ask and low
bid prices of the Company's common stock, as quoted on the Bulletin Board, were
$.21 and $.19 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 August 25, 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,
December 31, 1997, and March 31, 1998 filed pursuant to Section 15(d) of the
Exchange Act, the Company's Current Reports on Form 8-K, dated July 11, 1997,
February 3, 1998, and May 27, 1998 filed on August 13, 1997, February 17, 1998,
and August 3, 1998 respectively, and all other reports, if any, filed by the
Company pursuant to Section 13(a) for 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
Page
----
Available Information..........................................................2
Reports to Shareholders........................................................2
Incorporation of Certain Documents
by Reference.................................................................2
The Company....................................................................5
Risk Factors
1. Development Stage Company - No Assurance
as to Future Profitable Operations....................................10
2. Need for Substantial Additional
Capital...............................................................11
3. Going Concern Assumption................................................12
4. No Guarantee of Product
Acceptance in Market..................................................12
5. Dilutive and Other Adverse Effects
of Debentures and Warrants and Presently
Outstanding Options...................................................12
6. Proposed Public Offering:
Reverse Split.........................................................14
7. Dependence on Major Customer............................................15
8. Uncertainty of Product and
Technology Development:
Technological Factors.................................................15
9. Protection of Tirex Proprietary
Technology and Potential Infringement.................................15
10. Limited Public Market..................................................16
3
<PAGE>
11. Applicability of "Penny Stock Rules"
to Broker-Dealer Sales of
Company Common Stock.................................................17
12. Experience of Management...............................................17
13. Dependence on Key Personnel............................................18
14. Regulatory and Environmental Considerations............................18
15. Production and Supply..................................................19
16. Technological Changes..................................................19
17. Competition............................................................20
18. Liability Insurance....................................................20
19. No Dividends and None Anticipated......................................20
20. Authorization of Preferred Stock.......................................20
Selling Shareholder...........................................................21
Plan of Distribution..........................................................23
Description of Securities.....................................................23
Experts.......................................................................24
Legal Opinions................................................................24
Indemnification...............................................................25
4
<PAGE>
THE COMPANY
The Tirex Corporation (hereinafter, the "Company" or "Tirex") was
incorporated in Delaware on August 19, 1987 under the name "Concord Enterprises,
Inc." Its name was changed to "Stopwatch Inc." on June 20, 1989(1) and to the
"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 "3143619 Canada Inc.",(2) is presently engaged in the early
stages of the business of manufacturing, selling, and leasing a patented
cryogenic tire disintegration system which it has developed (the "TCS-1 System")
which integrates its patented disintegration technology with established
conventional mechanical technologies.
The Company acquired its core technology, based upon which it has
developed its patented cryogenic tire disintegration technology (the "Tirex
Technology"), in the fall of 1992(3). 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 R&D Inc."). The
Company began taking orders on the TCS-1 System in October of 1995 and, to date,
has received refundable deposits of $25,000 each on five Systems. Part of one of
the five Systems on which the Company has taken deposits has been delivered and
paid for with the balance of such System to be delivered when completed(4). The
Company has located and entered into written and oral agreements with various
engineering and manufacturing subcontractors and component suppliers, which
Management believes will
- ----------
(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 R&D 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.
(4) Construction of this System began in February of 1997 and it was
anticipated that delivery would occur on or before September 15, 1997.
However, completion of the System was, and remains, subject to delay
because of the limited funds available for such purpose. The Company was
able to complete and deliver the fully automated front-end sidewall cutter
and debeader module of this System by January of 1998, when it was
accepted and paid for by the purchaser. The parties rescheduled a new
delivery date for the balance of the System, which occurred in May of
1998.
5
<PAGE>
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.
Recent Financing Activities
The Type A Private Placement
Between November 5, 1997 and May 11, 1998, the Company offered to sell
(the "Type A Private Placement") through H.J. Meyers & Co., Inc., as placement
agent (the "Placement Agent"), 28 Units, (the "Type A Units") at a price of
$25,000 per Unit, each Type A Unit consisting of one 10% Convertible
Subordinated Debenture in the principal amount of $25,000 (the "Type A
Debentures") and 100,000 warrants (the "Type A Warrants") to purchase a like
number of shares of the Common Stock of the Company (the "Type A Warrant
Shares"). The Type A Private Placement was terminated by the Company and the
Placement Agent on May 11, 1998 upon the sale on April 9, 1998 of twenty Type A
Units to two purchasers, yielding gross proceeds of $500,000 and net proceeds of
$433,500 after payment of the Placement Agent's $10% commission, 3%
nonaccountable expense allowance, and an escrow agent's fee of $1,500. The Type
A Private Placement was effected 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 ("Rule 506"). The Type A Units were offered and sold
to a limited number of sophisticated investors who understood 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 2,000,000 outstanding Type A Warrants are exercisable at a price of
$.001 per share, commencing on the day following the effective date (the
"Effective Date") of the Company's registration statement on Form SB-2 (the
"Registration Statement") which was initially filed with the Securities and
Exchange Commission on May 21, 1998. The Company is working diligently towards
having the Registration Statement declared effective but cannot say with any
certainty when such will occur. The Type A Debentures are convertible commencing
on the day following the Effective Date of the Registration Statement at a
conversion ratio of 75% of market price. The Debentures are redeemable at any
time after issuance at 125% of face value.
The Company's sale of the 2,000,000 Type A Warrant Shares pursuant to the
exercise of the Type A Warrants and the Company's issuance of shares of its
Common Stock pursuant to the conversion of the Type A Debentures (the "Type A
Debenture Shares"), are being registered by way of inclusion in the Registration
Statement. The Type A Warrant Shares and the Type A Debenture Shares, to the
extent that they are acquired from the Company, may be offered and resold by the
holders thereof, from time to time, as market conditions permit in transactions
in the over-the-counter market, in negotiated transactions, or a combination of
such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices relating to prevailing market prices
or at negotiated prices.
The Type B Private Placement
On January 7, 1998, The Company issued a total of 3,305,000 shares of its
common stock to thirty-six persons, none of whom had any affiliation with the
Company. These issuances were
6
<PAGE>
made pursuant to the terms of a merger agreement by and among the Company, the
Company's wholly-owned subsidiary Tirex Acquisition Corp. ("TAC"), and RPM
Incorporated ("RPM") respecting the merger of RPM with and into TAC (the "RPM
Merger").
The RPM Merger Agreement was effective on January 7, 1998, concurrent with
the initial closing of a private placement of its securities which had been made
by RPM (the "RPM Private Placement") in which RPM offered to sell units of its
securities (the "RPM Units"), each such Unit consisting of one 10% Convertible
Subordinated Debenture in the principal amount of $10,000 (the "RPM Debentures")
and 10,000 shares of the Common Stock of RPM. Such initial closing took place
upon the sale of 30.5 RPM Units. The RPM Private Placement was continued by the
Company after the Merger as the "Type B Private Placement", described below. In
effectuation of the RPM Merger, the Company:
(i) exchanged one share of its common stock ("Merger Shares") for every
issued and outstanding share of RPM common stock (which included
305,000 shares sold in the RPM Private Placement and 3,000,000
shares which had been issued and outstanding prior to the
commencement of the RPM Merger); and
(ii) assumed RPM's liabilities and obligations under 30.5 RPM Debentures
in the aggregate principal amount of $305,000 which RPM had
theretofore sold in the RPM Private Placement;
All of the net proceeds from the RPM Private Placement ($276,085) remained
in RPM when it was merged into TAC, which was the surviving entity.
From the date of the RPM Merger until May 11, 1998, the Company continued
the RPM Private Placement through the Placement Agent as the "Type B Private
Placement, offering the balance of the securities which had originally been
offered by RPM, with the exchange of RPM 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. Units sold by the Company in the Type B
Private Placement (the "Type B Units") were identical to the RPM Units except
that the Type B Debentures were issued directly by the Company and the 10,000
share component of the Unit consisted of shares of the Company's common stock.
Pursuant thereto, between January 23, 1998 and May 11, 1998, the Company sold 23
Type B Units, consisting in the aggregate of 230,000 shares of its common stock
and twenty-three 10% convertible Debentures, each in the principal amount of
$10,000, to 21 private investors, who had no affiliation with the Company.
All of the Type B Debentures and the RPM Debentures, which had been
assumed by the Company (referred to collectively, hereinafter as the "Type B
Debentures"), were amended prior to the filing of the Registration Statement to
provide for: (i) the registration of the shares (the "Type B Conversion Shares")
issuable upon the conversion of the Debentures; (ii) the termination of the
holder's right to convert the Type B Debentures, effective the day immediately
prior to the filing of the Registration Statement, and the commencement of a new
conversion period as of the date following the effective date of the said
Registration Statement; and (iii) restrictions on the transfer of the Type B
Conversion Shares until the first to occur of: (a) six months from the effective
date of the Registration Statement, or (b) one year from the date of the
issuance of the Debenture. The Type B Debentures are convertible at a ratio of
one share for every $0.20 of the principal amount of the Debenture plus interest
earned thereon from the date of issuance. The Type B Debentures are redeemable
at face value plus all earned interest from the date of
7
<PAGE>
issuance on the first to occur of: (i) two years from the issue date or (ii) the
completion and closing of a public offering of its securities by the Company.
Issuances of shares of the Company's common stock pursuant to the
conversion of the Type B Debentures and the RPM Debentures, which were assumed
by the Company in the Merger, are being registered by way of inclusion in the
Registration Statement.
Merger with RPM Incorporated
3,000,000 shares (the "Pre-Placement RPM Shares") of the 3,305,000 shares
of RPM Common Stock for which the Company issued Merger Shares, constituted all
of the shares of RPM Common Stock which were issued and outstanding prior to the
commencement of RPM Private Placement. These shares were exchanged for 3,000,000
Merger Shares 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. None of the RPM Shareholders
had any affiliation of any kind with the Company prior to or after the Merger
(except insofar as they have become shareholders of the Company as a result of
the said Merger). Based upon information provided by the recipients (the RPM
Shareholders") of the above described 3,305,000 shares of Common Stock and
advice from the principals of RPM and the opinion of RPM's counsel, all
3,000,000 of the Pre-Placement RPM Shares were acquired by the RPM Shareholders
prior to March 31, 1997; all of the RPM Shareholders are "accredited investors"
as that term is defined in Rule 501(a) of the Securities Act; all 3,305,000 of
the shares of RPM common stock (including the Pre-Placement RPM Shares as well
as the RPM Shares sold in the RPM Private Placement) which were exchanged for
Merger Shares were acquired in transactions which were exempt from the
registration requirements of Section 5 of the Securities Act available under
Rule 506 of Regulation D thereof, which would not be integrated, as such term is
defined in Section 502(a) of Regulation D under the Securities Act, with the
distribution of the Merger Shares to the RPM Shareholders, so as to render
unavailable, for such distribution, the exemption from the registration
provisions of the Securities Act under Rule 506 of Regulation D.
Sales made in the RPM Private Placement and the Type B Private Placement
and the exchange of shares in the Merger were effected in compliance with Rule
506 to a limited number of sophisticated investors who understood and were
economically capable of accepting the risks associated with a speculative
investment, including the complete loss of such investment, and who were
"Accredited Investors" within the meaning prescribed by Regulation D and Rule
501 of the Securities Act.
The Type C Private Placement
On May 11, 1998, the Company completed a private placement (the "Type C
Private Placement") made directly by the Company, with all offers and sales made
by officers of the Company, of a total of 11,710,000 shares of the Company's
Common Stock (the "Type C Shares") at a price of $.10 per share, yielding
proceeds of $1,171,000, without deducting nominal incidental expenses incurred
in connection with the offering. As was the case with the Type A and Type B
Private Placements, the Type C Private Placement was effected in compliance with
Rule 506 and the Type C Shares were offered and sold only to a limited number of
sophisticated investors who understood and were economically capable of
accepting the risks associated with
8
<PAGE>
a speculative investment, including the complete loss of such investment, and
who were "Accredited Investors" within the meaning prescribed by Regulation D
and Rule 501 of the Securities Act.
The 11,710,000 Type C Shares which were sold are being registered for
re-sale to the public by the holders thereof by way of their inclusion in the
Registration Statement.
For a discussion of the possible dilutive effects, 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.
9
<PAGE>
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 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
10
<PAGE>
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 recently completed
and closed certain financing activities which yielded aggregate net proceeds to
the Company in the amount of $2,063,795 (see Risk Factor No. 5 "Dilutive and
Other Adverse Effects of Debentures and Warrants and Presently Outstanding
Options"). Such proceeds (together with Canadian and Quebec government and
governmental agency grants and loans, in various forms) have provided the
Company with what management believes will be adequate funding to accomplish the
following: (i) complete and cover all of the Company's costs related to, the
first production Model of the TCS-1 System (the "Production Model"); (ii)
renovate the Company's new manufacturing and assembly facility to bring it into
full compliance with all applicable provincial and municipal regulations; and
(iii) cover the Company's overhead costs and expenses through the end of October
1998. It should be noted however that the period of time for which these funds
will be available to cover normal overhead costs could be significantly reduced
if the Company is required to make substantial, presently unanticipated
expenditures to correct any flaws or defects in the design or construction of
the Production Model which may become apparent during the test phase which
commenced in June 1998 and is expected to be completed in or about October 1998.
The Company continues to require substantial additional capital 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
anticipates that only limited revenues from operations 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. 6 "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 Proposed Public Offering does not occur or does not occur within
a reasonable time, 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 any of the
securities offered under this Prospectus. 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. 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.
11
<PAGE>
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 $4,963,490 as at March 31, 1998. The Company may require substantial
additional funds in the future, and there can be no 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 recently been completed and is currently
undergoing thorough test procedures. 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.
5. Dilutive and Other Adverse Effects of Debentures and Warrants and
Presently Outstanding Options. The securities which were sold by the Company in
two of the three Private Placements (respectively, the "Type A Private
Placement" and the "Type B Private Placement"), which it recently completed and
closed consisted of the following:
(a) Twenty "Type A Units", each consisting of 100,000 common stock
purchase warrants (the "Type A 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
A Debentures"). Commencing the day following the effective date (the
"Effective Date") of the Company's Registration Statement on Form
SB-2 which was filed with the Securities Exchange Commission on May
21, 1998, the Type A Debentures will be convertible into shares of
the Company's Common Stock at a conversion ratio equal to 75% of the
average of the closing bid prices of the Common Stock, as quoted in
the OTC Electronic Bulletin Board of the NASD, during the five-day
period preceding the Company's receipt of a notice of conversion
from a Debenture holder. Also commencing as at the Effective Date,
the Type B Warrants will be exercisable for an aggregate of
2,000,000 shares of Common Stock at an exercise price of $.001 per
share.
(b) 53.5 "Type B 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 B
Debenture"). Commencing the day following the Effective Date, the
Type B Debentures will be convertible into shares of the
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Company's Common Stock at a conversion ratio of one share for every
$.20 of principal amount and interest earned thereon from the date
of issuance.
In addition, there are currently outstanding additional options and
warrants pursuant to which the Company is obligated to sell Common Stock, as
follows:
(a) an option to purchase 235,294, held by an unaffiliated consultant,
exercisable at a price of $.17 per share;
(b) (i) options to purchase an aggregate of 213,786, shares, held by two
unaffiliated consultants at an exercise price of $.187 per share
(expire on October 4, 1998); (ii) options to purchase an aggregate
of 250,000 shares to the same two unaffiliated individuals, and by
the spouse of a director of the Company, at an exercise price of
$.125 per share (expire on December 31, 1998); and (iii) options to
purchase 250,000 shares to the foregoing three individuals at an
exercise price of $.1875 per share (expire on March 31, 1999);
(c) 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. 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
(d) an option granted to CG Tire, Inc. to purchase a number of shares
equal, on a fully diluted basis, to 10% of the total issued and
outstanding Common Stock of the Company, at an exercise price equal
to fifty percent (50%) of the average of the final bid and ask
prices of the common stock of the Corporation, as quoted in the OTC
Bulletin Board during the ten business days preceding the exercise
date.
The Company is unable to determine with certainty, as at the date hereof,
the number of shares, if any, which will actually be issued pursuant to the
exercise of any of the foregoing options or warrants or the conversion of any of
the debentures because of several factors, including but not necessarily limited
to the following: (i) none of the holders of such securities have advised the
Company, and the Company is unable to predict, whether, and to what extent, such
persons will choose to exercise their options or warrants or convert their
debentures to Common Stock instead of redeeming them for cash, and (ii) with
respect to some of the options and debentures, the exercise price or conversion
ratio, and therefore the number of shares issuable, is dependent upon the market
price of the Common Stock at and around the time of exercise or conversion.
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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.
The Company has had no significant operating revenues to date.
Additionally, most of its cash assets are needed and are being utilized to cover
the expenses associated with the development of the TCS-1 System. Given the
foregoing, the Company periodically pays certain of its financial obligations by
issuing restricted shares of its common stock in lieu of cash, at a discount, in
recognition of the sale and market restrictions applicable thereto. Such
issuances result in dilution to the Company's existing shareholders.
6. 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 74,752,557 shares of the Company's
Common Stock issued and outstanding, but, while the Company considers that it
would be highly unlikely, as described above, in Risk Factor No. 5. "Dilutive
and Other Adverse Effects of Debentures and Warrants and Presently Outstanding
Options." if all of the currently outstanding options and warrants were to be
exercised and all of the currently outstanding debentures were to be converted,
there could be significantly more shares of the Company's Common Stock issued
and outstanding prior to the Proposed Public Offering. 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 (see "Risk Factor No. 5, Dilutive
and Other Adverse Effects of Debentures and Warrants and Presently Outstanding
Options).
Independent of the proposed public offering, the Company believes a
reverse stock split will benefit the Company and its shareholders and as such,
whether or not in connection with the proposed public offering, the Company
intends to effect a reverse stock split in the near future. The Company believes
that a decrease in the number of shares of common stock outstanding without any
material alteration of the proportionate economic interest in the Company
represented by individual shareholdings may increase the price of such shares to
a price more appropriate for an exchange listed or NASDAQ listed security,
although no assurance can be given that the market price of the common stock
will rise in proportion to the reduction in the number of outstanding shares
resulting from any reverse split or that the Company will in fact achieve an
exchange or NASDAQ listing at any time following such reverse split. The Company
also believes a reverse split and the expected market price increase resulting
therefrom, may increase the marketability of the Company's common stock given
the reluctance of many brokerage firms and institutional investors to recommend
lower priced stocks to their clients or to hold them in their own portfolios
although no assurance can be given that this would prove to be the case.
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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.
8. Uncertainty of Product and Technology Development: Technological
Factors. The Company has completed development and construction, of the first
production model 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. Such an outcome will be subject to all
of the risks inherent in the development of a new product, technology, and,
business, including unanticipated delays, expenses, and difficulties, as well as
the possible insufficiency of funding to complete development (see Risk Factor
No. 2 "Need for Substantial Additional Capital", above). There can be no
assurance that under commercial usage conditions, the TCS-1 System will
satisfactorily perform the functions for which it has been designed and
constructed, 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 establishing the Company's business at
a profitable level. 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.
9. 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 April 7, 1998, the patent
was issued by the U. S. Patent Office. The patent covers the Company's
disintegration technology. The Company expects the Canadian patent on the
Company's disintegration technology to be issued in the near future although it
cannot say with certainty when this may occur. 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 nontechnical 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 have the resources to defend the patent by bringing patent
infringement or other proprietary rights actions.
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10. Limited Public Market: Company Not Eligible for Inclusion on NASDAQ.
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 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. 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 NASDAQ
are required to have not less than $4,000,000 in net tangible assets, a public
float(5) with a market value of not less than five million dollars, and a
minimum bid of price of $4.00 per share. At the present time, the Company is
unable to state when, if ever, it will meet the Nasdaq application standards.
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 addition, it is likely that the
Company, which presently has 74,752,557 shares of Common Stock issued and
outstanding, will have to effect a reverse split of its issued and outstanding
stock, in order to meet the minimum bid price requirement (see, also, "Risk
Factor No. 5 Dilutive and Other Adverse Effects of Debentures and Warrants and
Presently Outstanding Option). 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 on the OTC Bulletin Board where the Common Stock is
currently quoted or in the "pink sheets" published by the National Quotation
Bureau, Inc. 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 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 "Risk Factor No. 11. 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
- ----------
(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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transactions. This could have an adverse effect on the ability of an investor to
sell any shares of the Company's Common Stock being purchased hereunder.
11. Applicability of "Penny Stock Rules" to Broker-Dealer Sales of Company
Common Stock. As discussed above, 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.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
special 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 purchasers of Common Stock hereunder 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.
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 hereunder to sell their shares in the secondary market, if a
stable market should ever develop.
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 may 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.
12. 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, except for
Louis Sanzaro, who has more than twenty years of experience in the recycling
business (excluding tires).
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13. 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 reasonable 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.
14. 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, test operations of the
TCS-1 and the Company's continuing research and development activities, may
require 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, 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. 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. However, the storing and processing of tires which are
required for testing of the first TCS-1 System at the Company's assembly
facility in Montreal will be subject to certain fire safety building code
standards. The Company expects to spend not more than $100,000 to bring the
facility into
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compliance with such standards. Moreover, the Company believes that the
inception of equipment manufacturing operations, together with continually
changing compliance standards and technology, may affect the Company's future
capital expenditure requirements relating to environmental compliance. Since all
government regulations are subject to change and to interpretation by local
administrations, the effect of government regulation could conceivably prevent,
or delay for a considerable period of time, the development of the Company's
business as planned and/or impose costly requirements on the Company or on its
TCS-1 System customers, which could result in the Company's or its TCS-1
customers' businesses being less profitable, or unprofitable, to operate.
15. 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. 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 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.
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.
16. 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. On
April 7, 1998 a patent was issued on the Company's tire disintegration
technology by the U.S. Patent Office. Even though the Company has been 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
mustcontinue 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
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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.
17. 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.
18. 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.
19. 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.
20. Authorization of Preferred Stock. The Company's Amended Certificate of
Incorporation authorizes the issuance of "Class A 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 "Class A" 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. Certain provisions in the employment agreements of
certain of the Company's officers could also 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.
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SELLING SHAREHOLDER
The 95,057 shares of common stock (the "Shares") being offered hereunder
by the Selling Shareholder were acquired by him on or about August 12, 1998,
pursuant to the terms of his employment agreement, dated as of June 22, 1998
(the "Rapfogel Employment Agreement") for services rendered to the Company
subsequent to the date of the said Employment Agreement but prior to the date of
issuance. The Rapfogel 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
Rapfogel 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 "restricted 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.
21
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Number of Number of Percentage
Positions 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>
Scott Rapfogel Employment Agreement dated as of Assistant Corporate 95,057 95,057 0 (1)
June 22, 1998 and Securities
Counsel
====================================================================================================================================
</TABLE>
(1) Less than 1%
22
<PAGE>
PLAN OF DISTRIBUTION
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 prevailing. In
connection therewith, the Selling Shareholder may utilize the services of
broker-dealers, 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 Registrant consists of one hundred twenty
million shares (120,000,000), par value $.001 per share, of which one hundred
fifteen million, (115,000,000) shares are designated Common Stock par value
$.001 per share, and five million (5,000,000) shares are designated Class A
Stock, par value $.001 per share. The Class A 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, 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.
23
<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-KSB, 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 6.2% of the Company's
issued and outstanding common stock.
24
<PAGE>
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 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.
25
<PAGE>
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, 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.
26
<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, December 31, 1997, and March 31, 1998, 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), February 3, 1998 (filed with the Commission on February
17, 1998), and May 27, 1998 (filed with the Commission on August 3, 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 one hundred twenty
million shares (120,000,000), par value $.001 per share, of which one hundred
fifteen million, (115,000,000) shares are designated Common Stock par value
$.001 per share, and five million (5,000,000) shares are designated Class A
Stock, par value $.001 per share. The Class A 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
27
<PAGE>
resolutions, 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 6.2% of the Registrant's issued
and outstanding common stock.
28
<PAGE>
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 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.
29
<PAGE>
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, 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 95,057 shares of common stock (the "Shares") being offered hereunder
by the Selling Shareholder were acquired by him pursuant to the terms of his
employment agreement, dated as of June 22, 1998 (the "Rapfogel Employment
Agreement"). The Rapfogel 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
Rapfogel Employment Agreement is sometimes referred to hereinafter as the
"Plan". For purposes of this Reoffer Prospectus, all of the Shares being
registered hereunder are "restricted 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 employee 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
30
<PAGE>
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.
(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.
31
<PAGE>
Item 8. Exhibits.
The exhibits filed as a part of this Report or incorporated herein by
reference are as follows:
Exhibit No. Item
- ----------- ----
5.1 Opinion of Frances Katz Levine, Esq., regarding the legality of
the securities being registered under this Registration
Statement.
10.1 Employment Agreement dated as of June 22, 1998 between
Registrant and Scott Rapfogel
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).
- ---------------------
32
<PAGE>
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 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
33
<PAGE>
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 Montreal, Province of Quebec, Canada, on the 24th day
of August, 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, August 24, 1998
- ----------------------------- Principal Executive and
Terence C. Byrne Financial Officer
/s/ Michel Massicotte Controller August 24, 1998
- -----------------------------
Michel Massicotte
A Majority of the Board of Directors
/s/ Terence C. Byrne Director August 24, 1998
- -----------------------------
Terence C. Byrne
/s/ Louis V. Muro Director August 24, 1998
- -----------------------------
Louis V. Muro
/s/ John L. Threshie, Jr. Director August 24, 1998
- -----------------------------
John L. Threshie, Jr.
/s/ Louis Sanzaro Director August 24, 1998
- -----------------------------
Louis Sanzaro
35
<PAGE>
EXHIBIT INDEX
Exhibit No. Item Page
- ----------- ---- ----
5.1 Opinion of Frances Katz Levine, Esq.
regarding the legality of the securities
being registered under this Registration
Statement 37
10.1 Employment Agreement dated as of June
22, 1998 between Registrant and
Scott Rapfogel (1)
24.1 Consent of Nevoso, Pivirotto, Pinkham
& Foster, Certified Public Account, LLC,
Independent Auditors for the Registrant 39
24.2 Consent of Frances Katz Levine, Esq.,
the 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 Exhibit 10.3, to Registrant's Current Report on Form 8-K dated May 27,
1998, which exhibit is incorporated herein by reference.
36
EXHIBIT
5.1
OPINION OF
FRANCES KATZ LEVINE, ESQ.
37
<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
August 24, 1998
The Tirex Corporation
740 St. Maurice
Montreal, Quebec
Canada H3C 1L5
Ladies and Gentlemen:
You have requested my opinion as counsel for The Tirex Corporation 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 shareholder (the
"Selling Shareholder") named in the Company's Registration Statement on Form
S-8, to be filed with the Securities and Exchange Commission on or about August
25, 1998 (the "Registration Statement"), of ninety five thousand and fifty seven
(95,057) shares of Common Stock of the Company, $.001 par value, per share,
currently issued and outstanding in the names of the Selling Shareholder (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 95,057 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,
/s/ Frances Katz Levine
------------------------------
Frances Katz Levine
38
EXHIBIT
24.1
CONSENT OF NEVOSO, PIVIROTTO, PINKHAM & FOSTER
Certified Public Accountants, LLC
39
<PAGE>
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.
/s/ Nevoso, Pivirotto, Pinkham & Foster
Certified Public Accountants, LLC
-----------------------------------------
Nevoso, Pivirotto, Pinkham & Foster
Certified Public Accountants, LLC
August 24, 1998
Fairfield, New Jersey
40
