As filed with the Securities and Exchange Commission on November 6, 1996.
Registration No. 333-___________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933
OPTIMAX INDUSTRIES, INC.
------------------------
(Exact name of Registrant as specified on its Charter)
Colorado 84-1059458
- --------------------------------- ---------------------
(State or other jurisdiction IRS Employer
of incorporation or organization) Identification Number
132 Lincoln Street
Boston, Massachusetts 02111
(617) 695-2950
------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Prentice-Hall Corporation Systems, Inc.
1560 Broadway
Denver, Colorado 80202
(303) 860-7052
-----------------------------------------------------------
(Name, address, including zip code, and telephone number of
agent for service of process)
Copies to:
Clifford L. Neuman, Esq.
Neuman & Cobb
1507 Pine Street
Boulder, Colorado 80302
(303) 447-2212
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
===============================================================================
<PAGE>
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to be To be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
- ------------------- ------------- --------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock, $.02
par value 3,766,194 (2) $2.875 $10,827,807.50 $3,733.73
Common Stock, $.02
par value 1,280,000 (3) 2.875 3,680,000.00 1,268.97
Class BB Warrants 1,700,000 (4) 1.125 1,912,500.00 659.48
-------------- ---------
TOTAL: $16,429,307.50 $5,662.18
- --------------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. Based upon the average of the bid and ask prices of
the securities pursuant to Rule 457(c).
(2) Consists of Common Stock offered by the Selling Shareholders.
(3) Consists of Common Stock issuable upon conversion of outstanding shares of
Series A Convertible Preferred Stock.
(4) Consists of Class BB Warrants offered for resale by certain Selling
Warrantholders.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.<PAGE>
<PAGE>
OPTIMAX INDUSTRIES, INC.
<TABLE>
<CAPTION>
Item No. and Heading
In Form S-3 Location
Registration Statement In Prospectus
---------------------- -------------
<S> <C>
1. Forepart of the Registration Forepart of Registration Statement
Statement and outside front and outside front cover page
cover page of Prospectus of Prospectus
2. Inside front and outside back Inside front and outside back
cover pages of Prospectus cover pages of Prospectus
3. Summary Information, Risk Risk Factors
Factors and Ratio of Earnings
to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Securityholder Selling Securityholders and
Warrantholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to Description of Securities
be Registered
10. Interest of Named Experts and Legal Matters
Counsel
11. Material Changes Recent Developments
12. Incorporation of Certain Incorporation of Certain Documents
Information by Reference by Reference
13. Disclosure of Commission Indemnification
Position on Indemnification
for securities Act Liabilities
- ------------------------------
<FN>
* Omitted from Prospectus because Item inapplicable or answer is in the
negative.
</FN>
</TABLE>
<PAGE>
<PAGE>
PROSPECTUS
OPTIMAX INDUSTRIES, INC.
-------------------------------------------
5,046,194 Shares
$.02 par value Common Stock
-------------------------------------------
1,700,000 Class BB Warrants
-------------------------------------------
This Prospectus relates to the reoffer of 3,766,194 shares of Common
Stock, $.02 par value ("Common Stock") of Optimax Industries, Inc., a Colorado
corporation (the "Company" or "Optimax"), by certain Securityholders of the
Company (the "Selling Shareholders"). This Prospectus also relates to the
reoffer of 1,700,000 Class BB Warrants ("Warrants") of the Company by certain
Warrantholders of the Company (the "Selling Warrantholders"). (Hereafter, the
Selling Shareholders and Selling Warrantholders shall collectively be referred
to as the "Selling Securityholders" and the offerings of both shall
collectively be referred to as the "Selling Securityholder Offering.")
This Prospectus also relates to the offer by the Company of 1,280,000
shares of Common Stock issuable upon the conversion of 1,280,000 shares of
Series A Convertible Preferred Stock (the "Convertible Preferred Stock"), which
conversion shall occur automatically upon the effective date of the
Registration Statement of which this Prospectus forms a part (the "Conversion
Offering").
The Selling Securityholders may offer all 3,766,194 shares of the Common
Stock and 1,700,000 Class BB Warrants in transactions in the over-the-counter
market at prices obtainable at the time of sale, or in privately-negotiated
transactions at prices determined by negotiation. The Selling Securityholders
may effect such transactions by selling the shares or warrants to or through
securities broker-dealers, and such broker-dealers may receive compensation in
the form of discounts, concessions, or commissions from the Selling
Securityholders, and/or the purchasers of the shares or warrants for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions). (See "SELLING SECURITYHOLDERS" and "PLAN OF
DISTRIBUTION.") The Selling Securityholders may be deemed to be "underwriters"
as defined in the Securities Act of 1933, as amended ("Securities Act"). If
any broker-dealers are used by the Selling Securityholder, any commissions paid
to broker-dealers and, if broker-dealers purchase any securities as principals,
any profits received by such broker-dealers on the resales of the securities,
may be deemed to be underwriting discounts or commissions under the Securities
Act. In addition, any profits realized by the Selling Securityholders may be
deemed to be underwriting compensation.
The Company will not receive any of the proceeds from the resale of the
shares of Common Stock or Class BB Warrants by the Selling Securityholders or
the conversion of the Convertible Preferred Stock. Pursuant to an agreement
between the Company and the Selling Securityholders, the Company has agreed to
pay all of the expenses of registering the securities offered hereby, which
expenses are estimated to be $15,000. The Selling Securityholders will,
however, pay the other costs related to the sale of their securities, including
discounts, commissions and transfer fees. The Company has agreed to indemnify
the Selling Securityholders against certain liabilities, including liabilities
under the Securities Act.
<PAGE>
<PAGE>
The Company's Common Stock and Class BB Warrants have been traded in the
over-the-counter market. The Common Stock and Class BB warrants are listed and
traded on the Nasdaq Small-Cap Market ("Nasdaq") under the symbols OPMX and
OPMXZ, respectively. On November 5, 1996, the closing bid and ask prices of
the Company's Common Stock and Class BB Warrants were $2.75 and $3.00, and
$1.00 and $1.25, respectively, as quoted by Nasdaq. There can be no assurance
that a market for the Common Stock or Class BB Warrants will continue in the
future. The Company has no arrangements with broker-dealers concerning the
maintenance of a trading market for the Common Stock or Warrants.
-------------------------------------------
<PAGE>
<PAGE>
FOR DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED IN EVALUATING
AN INVESTMENT IN THE COMPANY, SEE "RISK FACTORS" COMMENCING AT PAGE 9.
-------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSIONS, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction, or in any jurisdiction in
which the person making such offer or solicitation is not qualified to do so.
<PAGE>
<PAGE>
AVAILABLE INFORMATION
---------------------
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance with
the Exchange Act files periodic reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information concerning the Company can be inspected and
copied (at prescribed rates) at the Commission's Public Reference Section, Room
1024, 450 Fifth Street, N.W. Judiciary Plaza, Washington, D.C. 20549, as well
as at the following Regional Offices: Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material also may
be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
In addition, the Company's Common Stock is traded in the over-the-counter
market on the Nasdaq system, and reports, proxy statements and other
information concerning the Company can be inspected and copied at the Office of
the National Association of Securities Dealers, Inc., 1735 "K" Street, N.W.,
Washington, D.C. 20006.
The Company has filed a Registration Statement on Form S-3 with the
Commission, Washington, D.C., in accordance with the provisions of the Act.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information pertaining to the shares of Common Stock offered hereby and the
Company, reference is made to the Registration Statement, including the
exhibits and financial statement schedules filed as a part thereof. Reference
also should be made to the Annual Report to Shareholders and Annual Report on
Form 10-KSB for the year ended December 31, 1995, the Company's definitive
Proxy Statement, and the Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1996 and June 30, 1996, incorporated by reference into
this Prospectus. Statements herein contained concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an Exhibit to the Registration Statement.
Each such statement is qualified in its entirety by such reference. The
Registration Statement may be obtained from the Commission upon payment of the
fees prescribed therefor and may be examined at the principal office of the
Commission in Washington, D.C.<PAGE>
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The following documents which have been filed with the Commission pursuant
to the Securities Exchange Act of 1934, as amended, are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995 ("Annual Report"), SEC File No. 0-
19086, filed with the Commission on April 15, 1996;
(b) The Company's Current Report on Form 8-K dated February 1,
1996, SEC File No. 0-19086, filed with the Commission on
February 8, 1996;
(c) The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1996, SEC File No. 0-19082, filed with the
Commission on May 20, 1996;
(d) The Company's Current Report on Form 8-K dated July 23, 1996,
SEC File No. 0-19082, filed with the Commission on July 23,
1996, as amended on Form 8-K/A-1 filed with the Commission on
October 7, 1996;
(e) The Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1996, SEC File No. 0-19082, filed with the
Commission on August 19, 1996.
All documents filed by the Company with the Commission pursuant to Section
13a, 13c, 14 or 15d of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering covered by this Prospectus will be
deemed incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents.
Any statement contained in the above-referenced documents shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained in this Prospectus modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Copies of any documents or portions of such documents incorporated in this
Prospectus, not including exhibits to the information that is incorporated by
reference, unless such exhibits are specifically incorporated by reference to
this Prospectus, may be obtained at no charge by a written or oral request to
David W. Dube, President, Optimax Industries, Inc., 132 Lincoln Street, Boston,
Massachusetts 02111 (617) 695-2950.
<PAGE>
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS SUMMARY
------------------
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING THE RELATED NOTES THERETO, APPEARING ELSEWHERE IN THIS
PROSPECTUS.
THE COMPANY
-----------
Optimax Industries, Inc., a Colorado corporation ("Optimax" or the
"Company"), serves as a holding company for four (4) wholly-owned operating
divisions (Horticultural, Giftware, Truck Part Accessories and Property
Development).
The Horticultural Division, which consists of three (3) subsidiaries,
Plants For Tomorrow, Inc., a Colorado corporation, Flying Cow Farms, Inc., a
Florida corporation, and Growers Direct, Inc., a Florida corporation, maintains
an operating nursery and growing facility in Loxahatchee, Florida. Although
the Company's nursery has historically generated operating losses, resulting
primarily from cost overruns on plant installation contracts, the Company has
undertaken aggressive efforts to transform the nursery from an environmental
sciences and mitigation installer to a laterally-integrated combined Florida
native plants, beach revegetation and mangrove restoration growing facility,
where the Company has identified greater opportunity. The Company believes it
maintains one of the few diversified Florida nurseries, with over four hundred
(400) species of terrestrial and aquatic plants and plant seeds, capable of
supplying an increasing demand for wetlands and other environmentally-oriented
plant products. In addition, the Company plans to purchase and re-sell, on a
wholesale basis, foliage and plant products grown by non-affiliated nurseries
and consolidated for sale at the Company's nursery to mass merchandisers,
supermarket chains and other national and regional nursery products retailers.
The Giftware Division, which was recently established by the Company and
will conduct operations through its subsidiary, Art Smart, Inc., a Nevada
corporation, was created to design, develop and distribute floral and non-
floral related giftware lines, such as ceramic pottery, wicker baskets and
decorative boxes, that will be marketed with the foliage and plant products
grown or consolidated for sale by the Horticultural Division. In addition, the
Company recently announced that it has entered into a letter of intent to
purchase certain assets used by a privately-held picture framing and giftware
manufacturer located in Boston, Massachusetts, which it believes will lead to
strategic, potentially profitable opportunities, especially in the decorative
giftbox business. See Recent Developments.
The Truck Part Accessories Division, which consists of Taylor-Built
Industries, Inc. and Dyno-Might Truck Accessories, Inc., both Texas
corporations, markets bed-covers and bed-liners for pick-up trucks, on a dealer
wholesale and direct retail basis, from manufacturing and retail facilities
located in Dallas, Texas. The Company previously acquired the exclusive
license to manufacture a patented, electronically-activated retractable roll-up
bed-cover; however, due to previous capital deficiencies, the Company was not
able to profitably market the product. The Company believes that its bed-cover
product, coupled with the pairing of a bed-liner product it has internally
developed, can be successfully marketed on, initially, a regional basis. The
Company intends to add complementary truck part accessories to its product base
and believes, based upon its current capitalization, that it has sufficient
resources to generate substantial sales and achieve profitable operations.
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
- -------------------------------------------------------------------------------
On July 23, 1996, the Company acquired one hundred percent (100%) of the
outstanding shares of common stock of Vine Street Stores, Inc., a Massachusetts
corporation ("Vine Street"). Founded in 1995, Vine Street owns and operates
cut-flower, plant and foliage retail concessions located within mass
merchandisers and discount retailers in the Northeastern United States. The
Company believes there are numerous profitable opportunities available in
seeking and procuring additional retail concessions and expects to
significantly increase sales and profitability as it undertakes to vertically
integrate, to the extent possible, its Horticultural Division from the initial
growing stage at the operating nursery level to the point of sale at the retail
level.
Also on July 23, 1996, the Company completed the purchase of approximately
twelve (12) acres of undeveloped real property located in Colchester,
Connecticut. The property was acquired by Colchester Property Investors, LLC,
a wholly-owned limited liability company formed and organized for the purpose
of making the acquisition. The Company's preliminary plans for the property
include the development of a retail nursery and other commercial development.
The Company has a long-term strategy of expansion through internal growth
of existing operations and acquisitions which, the Company believes, will
strengthen its overall profitability. The Company regularly evaluates
possibilities for the acquisition of additional businesses, particularly within
the industries in which the Company has present operations, but at the present
time, there are no definitive arrangements or understandings with respect to
any potential material acquisitions.
The Company maintains its principal offices at 132 Lincoln Street, Boston,
Massachusetts 02111. Its telephone number at that address is (617) 695-2950
and its facsimile number is (617) 695-3630.
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
- -------------------------------------------------------------------------------
SELLING SECURITYHOLDER OFFERING
-------------------------------
Securities Offered: 3,766,194 shares of Common Stock, $.02 par
value (1)
1,700,000 Class BB Warrants (2)
Common Shares Outstanding: 4,740,591 (3)
Nasdaq Symbols:
Common Stock OPMX
Class BB Warrants OPMXZ
Offering Price: Prevailing Market Prices
CONVERSION OFFERING
-------------------
Securities Offered: 1,280,000 shares of Common Stock, $.02 par
value, upon conversion of outstanding
1,280,000 shares of Series A Convertible
Preferred Stock
- -------------------------
(1) Consists of (i) 1,500,000 shares of Common Stock issued in consideration
of the acquisition of Vine Street, (ii) 1,500,000 shares of Common Stock
sold by the Company in a private offering which was completed in August
1996 (the "Private Offering"), (iii) 200,000 shares of Common Stock
reserved for issuance pursuant to the exercise of outstanding Non-
Qualified Stock Options having a weighted average exercise price of $1.75
per share and (iv) 566,194 shares held by certain other Selling
Shareholders.
(2) Consists of (i) 1,500,000 Class BB Warrants sold by the Company in the
Private Offering and (ii) 200,000 Class BB Warrants held by certain other
Selling Securityholders.
(3) Does not give effect to (i) the conversion of 1,280,000 shares of
Convertible Preferred Stock into 1,280,000 shares of Common Stock in the
Conversion Offering, (ii) 2,129,124 shares of Common Stock reserved for
issuance pursuant to the exercise of outstanding Class BB Warrants
exercisable to purchase shares of the Company's Common Stock at an
exercise price of $3.00 per share, or (iii) 297,500 shares of Common Stock
reserved for issuance pursuant to the exercise of outstanding Non-
Qualified Stock Options having a weighted average exercise price of $4.26
per share.
RISK FACTORS
------------
The Offering involves a high degree of risk. Prospective investors should
carefully consider the factors set forth under "RISK FACTORS".
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
- -------------------------------------------------------------------------------
USE OF PROCEEDS
---------------
The Company will not receive any of the proceeds from the sale of shares
offered by the Selling Securityholders or from the Conversion Offering.
SUMMARY FINANCIAL DATA
----------------------
Set forth below is selected summary financial data with respect to the
Company. Financial information for the year ended December 31, 1995, and as of
and for the six months ended June 30, 1995 and June 30, 1996, is derived from
the financial statements incorporated by reference in this Prospectus and is
qualified by reference to such financial statements and the notes related
thereto.
<TABLE>
<CAPTION>
Six months ended
--------------------------------------
Year ended June 30, June 30, 1996
December 31, 1995 --------------------------
1995 Actual Pro Forma(1)
------------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
STATEMENTS OF
OPERATIONS DATA:
Revenues $ 454,857 $ 331,991 $ 144,369 $ 246,941
Operating (loss) (1,796,558) (476,690) (198,480) (176,424)
Net income (loss) (1,858,668) (567,004) (164,435) (147,468)
Net income (loss)
per common share (1.64) (.58) (.05)
</TABLE>
<TABLE>
<CAPTION>
June 30, 1996
As of --------------------------
December 31, 1995 Actual Pro Forma(1)
----------------- ----------- ------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets $1,236,059 $1,032,780 $4,018,391
Total liabilities 1,217,970 1,276,402 1,287,796
Working capital (599,869) (381,479) 733,500
Stockholders' equity 18,089 (243,688) 2,713,562
__________________________
<FN>
(1) Gives pro forma retroactive effect as of and for the period ended June 30,
1996 to (i) the acquisition of Vine Street, (ii) the purchase of the
Colchester, Connecticut property and (iii) the consummation of the Private
Offering in which the Company sold an aggregate of 1,500,000 Units for net
proceeds of $1,356,000.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
RISK FACTORS
------------
Prospective investors should review carefully the following investment
considerations in evaluating the Company and its business:
1. LIQUIDITY AND CAPITAL RESOURCES.
-------------------------------
In the past, the Company has operated on limited capital resources
and has depended primarily on funds generated from the sale of Common Stock and
short-term loans. Nevertheless, at June 30, 1996, the Company had a working
capital deficit of $(381,479), which is principally the result of its
accumulated operating deficit of $(8,039,622); although, giving effect to the
acquisitions of Vine Street and the Colchester Property and completing the
Private Offering, the Company had a pro forma working capital surplus of
$733,500 at June 30,1996. Even if the Company is able to attain its business
plan objectives, it does not anticipate having operating revenues sufficient to
pay its operating expenses until the first quarter of 1997, and there can be no
assurance that operating break-even can be achieved by this time or continue in
future periods. As a result, the Company expects to continue to experience a
shortage in working capital.
2. ADDITIONAL CAPITAL REQUIREMENTS.
-------------------------------
The Company will require additional capital in the future to finance
its business activities. The Company will have to obtain such additional
capital through borrowings or from additional equity financing. Additional
future equity financing may occur through the sale of either unregistered
Common Stock in exempt offerings or through the public offering of registered
stock. In any case, such additional equity financing may result in additional
dilution to investors. There can be no assurance that any additional capital,
funding or revenues can satisfactorily be arranged. The Company has no
arrangements for the acquisition of additional capital. (See "BUSINESS.")
3. LACK OF OPERATING PROFITS.
-------------------------
The Company's unaudited income statements for the six months ended
June 30, 1996 report a net loss of $(164,435), on total revenues of $144,369,
and expenses of $236,797. There can be no assurance that the Company's
operating revenues will substantially increase in the near future or that it
will be able to lower operating expenses. The Company does not expect any of
its operating subsidiaries to generate any operating profits for the remainder
of 1996.
4. RISKS OF BUSINESS DEVELOPMENT.
-----------------------------
The Company's operations are subject to all of the risks inherent in
a new business enterprise, including the absence of a profitable operating
history, shortage of cash, under-capitalization, and expense of new product
development. The Company does not anticipate positive cash flow on a monthly
basis until mid-1997, and there can be no assurance that operating break-even
can be achieved by this time or continue in future periods. Various problems,
expenses, complications and delays may be encountered in connection with the
development of the Company's products and business. Future growth beyond
present capacity will require significant expenditures for expansion,
marketing, research and development. These expenses must either be paid out of
the proceeds of this or future offerings or out of generated revenues and
Company profits. The availability of funds from either of these sources cannot
be assured.
<PAGE>
5. RAPIDLY CHANGING MARKET.
-----------------------
The market for the Company's products is rapidly changing with
evolving industry standards and frequent new product introductions. The
Company's future success will depend in part upon its continued ability to
enhance its existing products and to introduce new products and features to
meet changing customer requirements and emerging industry standards. There can
be no assurance that the Company will successfully complete the development of
future products or that the Company's current or future products will achieve
market acceptance. Any delay or failure of these products to achieve market
acceptance would adversely affect the Company's business. In addition, there
can be no assurance that products or technologies developed by others will not
render the Company's products or technologies non-competitive or obsolete.
6. NO PROPRIETARY ADVANTAGE.
------------------------
The Company's core business which involves the propagation and sale
of plant material is not subject to protection by the Company under any
copyright, trademark or trade secret laws. As a result, the Company holds no
proprietary advantage over others competing in the same industry.
7. DEPENDENCE ON PROPRIETARY TECHNOLOGY.
------------------------------------
Taylor-Built Industries, Inc. ("TBI"), one of the Company's operating
subsidiaries, manufactures its patented automated, retractable truck bed cover
under an exclusive, worldwide license from Seco Engineers, Ltd. ("Seco"). Seco
has served written notice upon TBI that it claims that the exclusive license is
null, void and unenforceable by virtue of defaults by TBI under the License
Agreement which occurred prior to the Company's acquisition of TBI from
Polyphase Corporation, the prior owner. The Company has served notice upon
Polyphase Corporation of Seco's claim, notwithstanding the fact that the
Company vehemently denies that the license is unenforceable. The Company
intends to vigorously defend its claims under the License Agreement while at
the same time vigorously assert all remedies which it has against Polyphase
Corporation should Seco prevail in its claim that the license is unenforceable.
Nevertheless, should the Company be unable to defend and maintain its rights
under the License Agreement, it will forfeit the right to manufacture and sell
TBI's sole commercial product; and the Company's investment in TBI will be
completely lost and forfeited, except for recourse which may be asserted
against Polyphase Corporation.
8. COMPETITION.
-----------
While the Company's operating subsidiaries represent significantly
diversified interests, each subsidiary independently faces competition from
numerous organizations which possess similar expertise and provide comparable
products or services as those furnished by the Company's subsidiaries. In most
instances, the Company's competitors are larger organizations with
substantially greater resources. The ability of the Company to successfully
compete within each industry segment will depend upon numerous factors,
including the Company's ability to generate additional working capital to
substantially expand both domestic and international marketing activity and to
identify additional products which can either be developed internally or
acquired from third parties to improve the Company's competitive positions.
There can be no assurance that the Company can successfully support the capital
requirements of its subsidiaries to enable them to achieve competitive parity.
9. DEPENDENCE UPON MARKETING.
--------------------------
While the Company believes that its diversified products hold
unsatisfied market demand, the Company's ability to generate sales will depend
upon developing and implementing a marketing strategy. There can be no
assurance that the Company can successfully develop, promote and maintain an
active market for its products.
10. DEPENDENCE UPON KEY PERSONNEL.
-----------------------------
The Company's future success depends in large part on the continued
service of its key technical, marketing, sales, and management personnel and on
its ability to continue to attract, motivate, and retain highly qualified
employees. Although the Company's employees have stock options, its key
employees may voluntarily terminate their employment with the Company at any
time. Competition for such employees is intense and the process of locating
technical and management personnel with the combination of skills and
attributes required to execute the Company's strategy is often lengthy.
Accordingly, the loss of the services of key personnel could have a material
adverse effect upon the Company's operations and on research and development
efforts. The Company does not have key person life insurance covering its
management personnel or other key employees.
11. DIVIDENDS.
---------
No dividend has been paid on the Company's Common Stock since
inception, nor, by reason of its present financial status and its contemplated
financial requirements, does the Company contemplate or anticipate paying any
dividends upon its Common Stock in the foreseeable future. (See "DESCRIPTION OF
SECURITIES.")
12. SHARES ELIGIBLE FOR FUTURE SALE.
-------------------------------
As of November 5, 1996, 4,740,591 shares of the Company's $.02 par
value Common Stock, were issued and outstanding, of which 3,954,266 are
"restricted securities" and under certain circumstances may, in the future, be
sold in compliance with Rule 144 adopted under the Securities Act. In general,
under Rule 144, subject to the satisfaction of certain other conditions, a
person, including an affiliate of the Company, who beneficially owned
restricted shares of Common Stock for at least two (2) years is entitled to
sell, within any three (3) month period, a number of shares that does not
exceed the greater of one percent (1%) of the total number of outstanding
shares of the same class, or if the Common Stock is quoted on Nasdaq or a stock
exchange, the average weekly trading volume during the four (4) calendar weeks
immediately preceding the sale. A person who presently is not and who has not
been an affiliate of the Company for at least three (3) months immediately
preceding the sale and who has beneficially owned the shares of Common Stock
for at least three (3) years is entitled to sell such shares under Rule 144
without regard to the volume limitations described above. In addition, the
Company currently has issued and outstanding (i) Class BB Warrants exercisable
to purchase, in the aggregate, 2,129,124 shares of Common Stock at an exercise
price of $3.00 per share, (ii) Non-Qualified Stock Options exercisable to
purchase, in the aggregate, 297,500 shares of Common Stock at a weighted
average exercise price of $4.26 per share and (iii) 1,280,000 shares of Series
A Convertible Preferred Stock convertible into 1,280,000 shares of Common Stock
upon the effective date of the Registration Statement of which this Prospectus
forms a part. The Company is registering for sale in the Selling
Securityholder Offering an aggregate of 3,766,194 shares of restricted Common
Stock and 1,700,000 Class BB Warrants and is registering for sale in the
Conversion Offering the 1,280,000 shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock. No prediction can be made as to
the effect, if any, that sales of shares of Common Stock or the availability of
such shares for sale will have on the market prices prevailing from time-to-
time. Nevertheless, the possibility that substantial amounts of Common Stock
may be sold in the public market may adversely effect prevailing market prices
for the Common Stock and could impair the Company's ability to raise capital in
the future through the sale of equity securities. Actual sales or the prospect
of future sales of shares of Common Stock under Rule 144 may have a depressive
effect upon the price of the Common Stock and the market therefor.
13. FUTURE SALES OF COMMON STOCK.
----------------------------
The Company's Board of Directors has the authority to issue up to
20,000,000 shares of Common Stock and to issue options and warrants to purchase
shares of the Company's Common Stock without shareholder approval. Future
issuance of Common Stock could be at values substantially below the Offering
Price in this Offering and therefore could represent further substantial
dilution to investors in this Offering. In addition, the Board could issue
large blocks of Common Stock to fend off unwanted tender offers or hostile
takeovers without further shareholder approval. (See "DESCRIPTION OF
SECURITIES.")
14. AUTHORIZED PREFERRED STOCK.
--------------------------
The Company's Articles of Incorporation, as amended, authorize the
issuance of up to 5,000,000 shares of $.001 par value preferred stock none of
which are outstanding. The Board of Directors has been granted the authority
to fix and determine the relative rights and preferences of preferred shares,
as well as the authority to issue such shares, without further stockholder
approval. As a result, the Board of Directors could authorize the issuance of
a series of preferred stock which would grant to holders preferred right to the
assets of the Company upon liquidation, the right to receive dividend coupons
before dividends would be declared to Common Stockholders, and the right to the
redemption to such shares, together with a premium, prior to the redemption of
Common Stock. Common stockholders have no redemption rights. In addition, the
Board could issue large blocks of preferred stock to fend against unwanted
tender offers or hostile takeovers without further shareholder approval. (See
"DESCRIPTION OF SECURITIES.")
15. LIMITED PUBLIC TRADING MARKET FOR THE COMPANY'S COMMON STOCK AND
CLASS BB WARRANTS.
----------------------------------------------------------------
While there currently exists in the over-the-counter market a
limited, public trading market for the Company's Common Stock and Class BB
Warrants, there can be no assurance that such a market will continue in the
future. There can be no assurances that an investor will be able to liquidate
his investment without considerable delay, if at all. If a market does
continue or develop, the price for the Company's securities may be highly
volatile and may bear no relationship to the Company's actual financial
condition or results of operations. (See "DESCRIPTION OF SECURITIES.")
16. LIMITATION OF DIRECTORS' LIABILITY.
----------------------------------
The Company's Articles of Incorporation provide, as permitted by
Colorado law, that its directors shall have no personal liability for certain
breaches of their fiduciary duties to the Company. This provision may reduce
the likelihood of derivative litigation against directors and may discourage
shareholders from bringing a lawsuit against directors for a breach of their
duty. In addition, the Company's Bylaws provide for mandatory indemnification
of directors and officers to the fullest extent permitted by Colorado law.
17. MANAGEMENT OF GROWTH.
--------------------
If the Company is successful in increasing demand for the Company's
products, of which there can be no assurance, growth of the Company could
create certain additional risks. Rapid growth can be expected to place a
substantial burden on the Company's management resources and financial
controls. The Company's ability to manage its growth effectively will require
the Company to continue to implement and refine its operational, financial and
information management systems and to train, motivate and manage its employees.
The Company's ability to attract and retain qualified personnel will have a
significant effect on the Company's ability to establish and maintain its
position its various markets, and failure of the Company to manage its growth
effectively could have material adverse effects on the Company's results of
operations.
18. RISKS OF LOW-PRICED STOCKS.
--------------------------
The over-the-counter markets for securities such as the Company's
Common Stock and Warrants historically have experienced extreme price and
volume fluctuations during certain periods. These broad market fluctuations
and other factors, such as new product developments and trends in the Company's
industry and the investment markets generally, as well as economic conditions
and quarterly variations in the Company's results of operations, may adversely
affect the market price of the Company's Common Stock.
19. THE SECURITIES ENFORCEMENT AND PENNY STOCK REFORM ACT OF 1990.
-------------------------------------------------------------
The Securities Enforcement and Penny Stock Reform Act of 1990
requires additional disclosure, relating to the market for penny stocks, in
connection with trades in any stock defined as a penny stock. The Commission
recently adopted regulations that generally define a penny stock to be any
equity security that has a market price of less than $5.00 per share, subject
to certain exceptions. Such exceptions include any equity security listed on
Nasdaq and any equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such
issuer has been in continuous operation for less than three years, or
(iii) average annual revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated therewith. See "Certain Market Information."
Although the Common Stock and Warrants are currently approved for
quotation on the Nasdaq Small-Cap Market, there can be no assurance that they
will remain eligible to be included on Nasdaq. In the event that the Company's
Common Stock and Warrants were no longer eligible for quotation on Nasdaq, the
Common Stock and Warrants could become subject to rules adopted by the
Commission regulating broker-dealer practices in connection with transactions
in "penny stocks." Those disclosure rules applicable to penny stocks require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized list disclosure document prepared by
the Securities and Exchange Commission that provides information about penny
stocks and the nature and level of risks in the penny stock market. In
addition, the disclosure must identify the broker's role, if any, as a market-
maker in the particular stock, provide information with respect to market
prices of the Common Stock and the amount of compensation that the broker will
earn in the proposed transaction. The broker-dealer must also provide the
customer with certain other information and must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Further, the
rules require that following the proposed transaction the broker provide the
customer with monthly account statements containing market information about
the prices of the securities. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules. If the Company's Common
Stock or Warrants became subject to the penny stock rules, many brokers may be
unwilling to engage in transactions in the Company's securities because of the
added disclosure requirements, thereby making it more difficult for purchasers
of Common Stock and Warrants in this offering to dispose of their securities.
20. MARKET OVERHANG FROM WARRANTS AND OUTSTANDING OPTIONS.
-----------------------------------------------------
The Company has outstanding 2,426,624 options and warrants. To the
extent that such stock options or warrants are exercised, dilution to the
interests of the Company's stockholders may occur. Exercise of these options
or warrants or even the potential of their exercise may have an adverse effect
on the trading price and market for the Company's Common Stock. The holders of
the options or warrants are likely to exercise them at times when the market
price of the shares of Common Stock exceeds the exercise price of the options
or warrants. Accordingly, the issuance of shares of Common Stock upon exercise
of the options or warrants may result in dilution of the equity represented by
the then outstanding shares of Common Stock held by other shareholders.
Holders of the options or warrants can be expected to exercise them at a time
when the Company would, in all likelihood, be able to obtain any needed capital
on terms which are more favorable to the Company than the exercise terms
provided by such options or warrants. (See "DESCRIPTION OF SECURITIES.")
USE OF PROCEEDS
---------------
The Company will not receive any of the proceeds from the sale of shares
by the Selling Securityholder or from the conversion of the Convertible
Preferred Stock. The Common Stock may be offered from time-to-time by the
Selling Securityholders through ordinary brokerage transactions in the over-
the-counter market, in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. The Selling
Securityholders will pay brokerage commissions, if any, attributable to the
sale of the Common Stock by the Selling Securityholders.
<PAGE>
<PAGE>
SELLING SECURITYHOLDERS
-----------------------
The following table sets forth certain information regarding the Common
Stock held by the Selling Securityholders as of October 15, 1996. To the
knowledge of the Company, the Selling Securityholder has had no material
relationship with the Company within the past three years, other than as a
result of the ownership of the securities, except as is expressly noted. The
following information has been furnished to the Company by the person named:
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering (1) After Offering
Name & Address -------------------- Shares Warrants --------------------
of Beneficial Owner Shares % (2) To Be Sold To Be Sold Shares %
- ------------------- -------- ----- ---------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
David W. Dube (3) 500,000 8.4% 500,000 -0- -0- -0-
132 Lincoln Street
Boston, MA 02111
Allan M. Huberman (4) 500,000 8.4% 500,000 -0- -0- -0-
132 Lincoln Street
Boston, MA 02111
RIB, LLC (5) 500,000 8.4% 500,000 -0- -0- -0-
2 Broadway
New York, NY 10004
Stephen G. Calandrella (6) 330,191 5.4% 75,000 100,000 155,191 2.6%
4465 Northpark Drive
Colorado Springs, CO 80907
Clifford L. Neuman (7) 87,500 1.5% 87,500 -0- -0- -0-
1507 Pine Street
Boulder, CO 80302
D.C.A. Grantor Trust (8) 325,000 5.2% 225,000 100,000 -0- -0-
Porta Vita - Bella Vista
South Penthouse - Roof
19925 N.E. 39th Place
Aventura, FL 33180
John Schieffelin 10,000 .3% 10,000 10,000 -0- -0-
691 Old Jonas Hill Road
Lafayette, CA 94549
Robert J. Otoupalik 20,000 .7% 20,000 20,000 -0- -0-
1821 Overview Circle
Santa Ana, CA 92705
Bruce C. Levin & Susan E. 10,000 .3% 10,000 10,000 -0- -0-
Levin, Ttees for the Levin
Family Trust dated 06/12/80,
FBO Bruce C. Levin
774 Holmby Avenue
Los Angeles, CA 90024
Philip G. da Silva 10,000 .3% 10,000 10,000 -0- -0-
535 Vine Street
Paso Robles, CA 93446
Robert Linford 20,000 .7% 20,000 20,000 -0- -0-
Betty Linford
P. O. Box 282126
San Francisco, CA 94128
Frank A. Duckworth 20,000 .7% 20,000 20,000 -0- -0-
700 New Hampshire Ave.
Washington, DC 20027
Maurice Gozlan 88,400 2.9% 88,400 88,400 -0- -0-
Stacy Gozlan
3422 N.E. 166th Street
North Miami, FL 33160
Paul F. Petrus 10,000 .3% 10,000 10,000 -0- -0-
2808 S. E. Dune Drive
Stuart, FL 34996
Mark Weinbaum 15,000 .5% 15,000 15,000 -0- -0-
Joan Weinbaum
738 W. 50th Street
Miami Beach, FL 33140
Ronald G. Brenner 20,000 .7% 20,000 20,000 -0- -0-
8403 Estero Blvd., #302
Ft. Meyers, FL 33931
Robert Doyon 80,000 2.6% 80,000 80,000 -0- -0-
Pauline Doyon
P. O. Box 841
Dennis, FL 34284
Marvin Berkowitz 10,000 .3% 10,000 10,000 -0- -0-
Florence Berkowitz
5113 Pine Drive
Boynton Beach, FL 33437
William E. Cassidy 40,000 1.3% 40,000 40,000 -0- -0-
8370 W. Flagler Street, #252
Miami, FL 33144
Leon & Nina Hertzson 20,000 .7% 20,000 20,000 -0- -0-
16 Dougal Lane
E. Northport, NY 11731
David F. Gordon 20,000 .7% 20,000 20,000 -0- -0-
1001 Burr Oaks Drive
West Des Moines, IA 50266
Carl Franzblau 12,000 .3% 12,000 12,000 -0- -0-
Myrna Franzblau
147 Plymouth Road
Newtown, MA 02161
Jehuda Reinharz 10,000 .3% 10,000 10,000 -0- -0-
66 Beaumont Avenue
Newton, MA 02160
Christopher Winship 10,000 .3% 10,000 10,000 -0- -0-
Nancy Winship
128 Laurel Road
Chestnut Hill, MA 02167
Harry J. Nichols 40,000 1.3% 40,000 40,000 -0- -0-
906 Olive Street, Ste. 510
St. Louis, MO 63101
Kurt Hellweg 30,000 1.0% 30,000 20,000 -0- -0-
Sheryl Hellweg
4083 E. Eaglescliffe Drive
Springfield, MO 65869
Wayne Saker 20,000 .7% 20,000 20,000 -0- -0-
55 Shaw Road
Chestnut Hill, MA 02167
Vito Crecca 5,000 .1% 5,000 5,000 -0- -0-
Jean Crecca
25 Leigh Ct.
Randolph, NJ 07869
Leslie S. Turchin 40,000 1.3% 40,000 40,000 -0- -0-
810 Navesnik River
Locust, NJ 07760
David S. Nagelberg, IRA 40,000 1.3% 40,000 40,000 -0- -0-
Delaware Charter Guarantee
& Trust Company
662 Juniper Place
Franklin Lakes, NJ 07417
Ronald I. Heller, IRA 40,000 1.3% 40,000 40,000 -0- -0-
Delaware Charter Guarantee
& Trust Company
74 Fairview Road
Tenafly, NJ 07670
<PAGE>
John Mark Lucas 10,000 .3% 10,000 10,000 -0- -0-
893 Diane Ct.
Woodbridge, NJ 07095
Melvin Feld 30,000 1.0% 30,000 30,000 -0- -0-
223-25 Sheridan Street
Perth Amboy, NJ 08861
Robert Gross 40,000 1.3% 40,000 40,000 -0- -0-
27 Park Gate Drive
Edison, NJ 08820
Stuart K. Sherman 20,000 .7% 20,000 20,000 -0- -0-
211 Allison Court
Englewood, NJ 07631
Barbara E. Zimmer 20,000 .7% 20,000 20,000 -0- -0-
55 Ocean Avenue 7B
Monmouth Beach, NJ 07750
Robert Joseph 10,000 .3% 10,000 10,000 -0- -0-
41 Woodland Road
West Caldwell, NJ 07006
David Feinsilver 20,000 .7% 20,000 20,000 -0- -0-
215 Milburn Avenue
P. O. Box 312
Milburn, NJ 07041
Pete Book 20,000 .7% 20,000 20,000 -0- -0-
69 Windsor Drive
Pine Brook, NJ 05058
Road & Show Cellular, Inc. 20,000 .7% 20,000 20,000 -0- -0-
200 E. 89th St., Ste. 44 So.
New York, NY 10128
Bonnie S. Grossman 20,000 .7% 20,000 20,000 -0- -0-
80 Round Hill Road
Scarsdale, NY 10583-1704
Irving Spitalnick, IRA 20,000 .7% 20,000 20,000 -0- -0-
245 Park Avenue, 9th Fl.
New York, NY 10167
<PAGE>
Melvin Schlossberg IRA 10,000 .3% 10,000 10,000 -0- -0-
Bear Sterns IRA Dept.
245 Park Avenue, 9th Fl.
New York, NY 10167
Ttees of GEM Studios, Inc. 10,000 .3% 10,000 10,000 -0- -0-
Profit Sharing Plan Trust
FBO Henry Higgins
226 Annadale Road
Staten Island, NY 10312
Jonathan E. Rothschild 30,000 1.0% 30,000 20,000 -0- -0-
300 Mercer Street, 28F
New York, NY 10003
Irving Freedberg, Anne 40,000 1.3% 40,000 40,000 -0- -0-
Freedberg, d/b/a Bellini
282 So. Mountain Road
New City, NY 10956
Jerome Toder 20,000 .7% 20,000 20,000 -0- -0-
Mildred Toder
411 Alan Ct.
East Meadow, NY 11554
Charles Merlis 10,000 .3% 10,000 10,000 -0- -0-
517 McLean Avenue
Yonkers, NY 10705
Zev Appel 20,000 .7% 20,000 20,000 -0- -0-
22 Yale Drive
Monsey, NY 10952
Ralph Mandarino 20,000 .7% 20,000 20,000 -0- -0-
21 Fourth Place
Syosset, NY 11791
Steve Shalit 20,000 .7% 20,000 20,000 -0- -0-
206-08 Emily Road
Bayside, NY 11260
Henry Higgins 10,000 .3% 10,000 10,000 -0- -0-
421 Lexington Ave., Rm. 220
New York, NY 10170
George Sinel 10,000 .3% 10,000 10,000 -0- -0-
420 E. 23rd St., Apt. 11B
New York, NY 10010
Woodside Assurance, Inc. 80,000 2.6% 80,000 80,000 -0- -0-
1365 York Avenue, #30A
New York, NY 10021
Alan Fisher 20,000 .7% 20,000 20,000 -0- -0-
1775 Broadway
New York, NY 10019
Sean Mulcahy 5,000 .1% 5,000 5,000 -0- -0-
15 Walnut Hill Road
Pougkeepsie, NY 12603
Elizabeth Annie Wolszon 20,000 .7% 20,000 20,000 -0- -0-
7022 Sawmill Village Drive
Columbus, OH 43235
William J. Motto (TTEE) 10,000 .3% 10,000 10,000 -0- -0-
David H. Motto (TTEE)
FBO William J. Motto
U/A/D 3/9/92
3471 River Hills Drive
Cincinnati, OH 45244
A. F. Lehmkuhl 40,000 1.3% 40,000 40,000 -0- -0-
423 Northwest Street
Bellevue, OH 44811
Fred D. Hightower 40,000 1.3% 40,000 40,000 -0- -0-
c/o Hightower Ins. Agency
510 Legal Arts Centre
Youngstown, OH 44503
Charles Goodin 10,000 .3% 10,000 10,000 -0- -0-
7903 Lakehurst Drive
Oklahoma City, OK 73120
Walter E. Scott 20,000 .7% 20,000 10,000 -0- -0-
Two Warren Place
6120 S. Yale, Suite 805
Tulsa, OK 74136-4233
Stephen A. Sheller 20,000 .7% 20,000 20,000 -0- -0-
1528 Walnut St., 3rd Fl.
Philadelphia, PA 19102
Joseph Clark, IRA 13,600 .4% 13,600 13,600 -0- -0-
706 Abbeydale Court
Ambler, PA 19002
Bernard M. Weiss 21,000 .7% 21,000 21,000 -0- -0-
110 Almatt Place
Philadelphia, PA 19115
Steven B. Rosner 20,000 .7% 20,000 20,000 -0- -0-
Money Purchase Pension Plan
1220 Mirabeau
Gladwyne, PA 19035
John W. Caldwell 20,000 .7% 20,000 20,000 -0- -0-
306 Winding Way
Glenside, PA 19038
Richard Gruber 20,000 .7% 20,000 20,000 -0- -0-
926 Ocean Blvd.
Myrtle Beach, SC 29578
L. Neil Leroy 10,000 .3% 10,000 10,000 -0- -0-
137 Club Course Drive
Hilton Head Island, SC 29928
Kent M. Hamilton 20,000 .7% 20,000 20,000 -0- -0-
14500 San Pedro, Ste. 200
San Antonio, TX 78232
Frederick J. Oswald 40,000 1.3% 40,000 40,000 -0- -0-
3312 Big Horn Trail
Plano, TX 75075
Bill J. Pope 20,000 .7% 20,000 20,000 -0- -0-
1260 So. 1600 West
Orem, UT 84058
Terry DeVietti 10,000 .3% 10,000 10,000 -0- -0-
209 E. 18th, #20
Ellensburg, WA 98926
Camden Enterprises Ltd. 20,000 .3% 20,000 -0- -0- -0-
Attn: Joseph Rubinstein
2 Clanwilliam Terrace
Dublin 2 Ireland
Ronald Brenner 15,000 .2% 15,000 -0- -0- -0-
8474 Charter Club Cr, #1
Fort Myers, FL 33907
Bill J. Pope 20,000 .3% 20,000 -0- -0- -0-
1866 N. 1450 E
Provo, UT 84604
Seymour & Mary Reich 10,000 .1% 10,000 -0- -0- -0-
1066 Ledgewood Road
Mountainside, NJ 07092-22137
IF Consulting 68,694 1.1% 68,694 -0- -0- -0-
Attn: Leon Smith
19 West Street North
Nassau, Bahamas
Alex Lauchian 20,000 .3% 20,000 -0- -0- -0-
602 Saint James Court
Flats Village, Bermuda
Richard Groober 20,000 .3% 20,000 -0- -0- -0-
10821 Archer Lane
Williamsport, MD 21795
Times Holding Limited 100,000 1.7% 100,000 -0- -0- -0-
56 Fitzwilliam Square
Dublin 2 Ireland
____________________________
<FN>
(1) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them as of the date of this Prospectus, or
within 60 days of such date, are treated as outstanding when determining
the percent of the class owned by such individual.
(2) Gives effect to the automatic conversion of 1,280,000 shares of
Convertible Preferred Stock into 1,280,000 shares of Common Stock on the
date of this Prospectus.
(3) Mr. Dube is President, Chief Executive Officer and Director of both the
Company and Vine Street. Reflects shares of Common Stock issued in
connection with the acquisition of Vine Street Stores, Inc.
(4) Mr. Huberman is a Director of Vine Street Stores, Inc. Reflects shares of
Common Stock issued in the Company's acquisition of that subsidiary.
(5) Reflects shares of Common Stock issued in connection with the acquisition
of Vine Street Stores, Inc. RIB, LLC is an affiliate of Eric Bashford who
is a principal of RAS Securities Corp., which served as Placement Agent in
connection with the Company's Private Offering that closed in August 1996.
(6) Mr. Calandrella is a Director and former Chief Financial Officer of the
Company. Includes 55,000 shares of Common Stock, 100,000 Class BB
Warrants and non-qualified stock options exercisable to purchase an
additional 25,000 shares of Common Stock at an exercise price of $1.50 per
share owned by Mr. Calandrella. Also includes 135,191 shares of Common
Stock and 12,500 Class BB Warrants owned by Rockies Fund, Inc., of which
Mr. Calandrella is an officer and director and would be deemed to exercise
shared voting and investment power with respect to such securities. Mr.
Calandrella disclaims beneficial ownership of the securities owned by
Rockies Fund, Inc. for purposes of Section 16 of the Securities Exchange
Act of 1934.
(7) Mr. Neuman is a principal of the law firm of Neuman & Cobb which serves as
legal counsel to the Company.
(8) Includes 75,000 shares of Common Stock and 100,000 Class BB Warrants
issued as compensation under a Financial Advisory Agreement. Also
includes Non-Qualified Stock Options exercisable to purchase 150,000
shares of Common Stock at an exercise price of $2.00 per share issued by
the Company in settlement of a prior civil lawsuit.
</FN>
</TABLE>
<PAGE>
<PAGE>
PLAN OF DISTRIBUTION
--------------------
The Selling Securityholders have advised the Company that sales of the
shares of Common Stock and Warrants may be effected from time to time in
transactions (which may include block transactions) in the over-the-counter
market, in negotiated transactions, through the writing of options on the
Common Stock or Warrants or a combination of such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale, or
at negotiated prices. The Selling Securityholders may effect such transactions
by selling the Common Stock or Warrants directly to purchasers or through
broker-dealers that may act as agents or principals. Such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Securityholders and/or the purchasers of shares of Common Stock or
Warrants for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The Selling Securityholders and any broker-dealers that act in connection
with the sale of the shares of Common Stock or Warrants as principals may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commissions received by them and any profit on the
resale of the shares of Common Stock or Warrants as principals might be deemed
to be underwriting discounts and commissions under the Securities Act. The
Selling Securityholders may agree to indemnify any agent, dealer or broker-
dealer that participates in transactions involving sales of the shares of
Common Stock or Warrants against certain liabilities, including liabilities
arising under the Securities Act. The Company will not receive any proceeds
from the sales of shares of Common Stock or Warrants by the Selling
Securityholders. Sales of the shares of Common Stock or Warrants by the
Selling Securityholders, or even the potential of such sales, would likely have
an adverse effect on the market price of the Common Stock or Warrants.
The shares of Common Stock and Warrants are offered by the Selling
Securityholders on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act. The Company has agreed to pay all expenses incurred in
connection with the registration of the shares offered by the Selling
Securityholders; provided, however, that the Selling Securityholders shall be
exclusively liable to pay any and all commissions, discounts and other payments
to broker-dealers incurred in connection with their sale of the shares.
<PAGE>
<PAGE>
RECENT DEVELOPMENTS
-------------------
On July 23, 1996, the Company successfully consummated (i) the acquisition
of Vine Street and (ii) the purchase of 12 acres of undeveloped commercial
property in Colchester, Connecticut. Those two acquisitions were undertaken
concurrently with a Private Offering by the Company pursuant to which, in
August, 1996, it completed the sale of an aggregate of 1,500,000 Units, each
Unit consisting of one (1) share of Common Stock and one (1) Class BB Warrant
at a Private Offering price of $1.25 per Unit.
ACQUISITION OF VINE STREET STORES, INC.
- ---------------------------------------
The Company consummated the acquisition of one hundred percent (100%) of
the issued and outstanding shares of capital stock of Vine Street Stores, Inc.,
a Massachusetts corporation ("Vine Street") in exchange for issuing to the
shareholders of Vine Street, pro rata, an aggregate of 1,500,000 shares of the
Company's Common Stock. The acquisition was structured as a tax-free
reorganization pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended.
Vine Street was founded in 1995 for the purpose of owning and operating
cut-flower, plant and foliage retail concessions located within mass
merchandisers and discount retailers. Currently, Vine Street owns and operates
seven (7) retail concessions, located predominately in the Northeastern United
States, and is seeking to open additional retail concessions as profitable
opportunities arise. Each new retail location requires a capital infusion of
approximately five thousand dollars ($5,000), consisting principally of retail
store fixtures and inventory. In the past, Vine Street had relied upon a
single source of supply for inventory, which is a company owned and operated by
one of the former Vine Street principal shareholders, who is currently a
shareholder and Secretary of the Company, Allan M. Huberman. Although the
Company expects this relationship with the inventory supplier to continue in
the near future, upon terms at least as favorable as would be available to the
Company from non-affiliated suppliers, the Company plans to grow inventory from
its Loxahatchee, Florida facility for resale at the Vine Street retail
concessions. In this way, the Company plans to develop a vertically-integrated
operation, controlling all aspects of inventory distribution from source of
supply to point of sale, with an emphasis on increasing the quality of the
saleable inventory products.
As part of the acquisition of Vine Street, David Dube, Treasurer of Vine
Street, was elected to serve as a director of the Company joining Paul Stevens
and Stephen Calandrella. Mr. Dube was also elected to serve as President and
Chief Executive Officer of the Company.
ACQUISITION OF COLCHESTER PROPERTY
- ----------------------------------
Concurrent with the acquisition of Vine Street, the Company through a
newly-formed subsidiary, Colchester Property Investors, LLC, purchased
approximately 12 acres of undeveloped real property located in Colchester,
Connecticut. The contract to purchase the property was assigned by Vine Street
to the limited liability company as part of the concurrent closing. In
consideration of the property, the Company paid to the sellers $430,000 out of
the proceeds of the Private Offering and issued an aggregate of 1,280,000
shares of Series A Convertible Preferred Stock (the "Convertible Preferred
Stock") for the remainder of the Purchase Price.
Preliminarily, the Company plans to utilize a portion of the Colchester
property to possibly develop a retail nursery or garden center that will be
supplied, in part, by the Company's existing propagation facility in
Loxahatchee, Florida. A portion of the property may also be used for other
commercial development.
CREATION OF GIFTWARE DIVISION
- -----------------------------
The Company recently organized a newly-formed subsidiary, Art Smart, Inc.,
a Nevada corporation, to coordinate the design and development of floral and
non-floral related giftware lines, such as ceramic pottery, wicker baskets and
decorative boxes, that will be marketed with the foliage and plant products
grown or consolidated for sale at the Company's Loxahatchee, Florida facility.
The Company believes, based upon available market research, an analysis of
related products offered by competitors and other information sources, that
corollary giftware lines could be a significant generator of increased sales
and corresponding increased cash flow, especially as the Company proceeds with
its plans to vertically integrate its horticultural division products.
In addition, the Company recently announced that it has entered into a
letter of intent to purchase certain assets used by a privately-held picture
framing and giftware manufacturer located in Boston, Massachusetts. The
Company believes that the purchase will be strategic in that there is
opportunity to integrate and expand certain combined assets, namely decorative
boxes and specialty containers, and that some, if not most, of the resulting
combined product lines are purchased by the same national and regional retail
chain giftware buyers. The Company expects to complete the purchase of these
certain assets by November 15, 1996, subject to the satisfaction of certain
conditions.
PRIVATE OFFERING
- ----------------
Concurrent with the acquisitions of Vine Street and the Colchester
Property, the Company conducted and, in August 1996, completed the Private
Offering of 1,500,000 Units, each Unit consisting of one (1) share of Common
Stock and one (1) Class BB Warrant, at a Private Offering price of $1.25 per
Unit. After deducting Offering costs, including placement agent commissions
and legal and accounting expense, the Company realized net proceeds from the
Private Offering of approximately $1,356,000. Of those proceeds, approximately
$430,000 was used to complete the purchase of the Colchester, Connecticut
property. The Company intends to use the balance of the proceeds for working
capital which it expects to be sufficient to satisfy its working capital needs
for approximately six (6) months.
INDEMNIFICATION
---------------
The By-Laws of the Company provide for the indemnification of Officers and
Directors to the maximum extent allowable under Colorado law. Insofar as the
indemnification for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to Directors, Officers or persons controlling the
Company pursuant to such 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.
<PAGE>
<PAGE>
DESCRIPTION OF SECURITIES
-------------------------
The Company is authorized to issue up to 20,000,000 shares of $.02 par
value Common Stock and 5,000,000 shares of $.001 par value Preferred Stock. As
of September 25, 1996, 4,703,091 shares of Common Stock and 1,280,000 shares of
Preferred Stock were issued and outstanding.
COMMON STOCK
- ------------
Each holder of Common Stock of the Company is entitled to one (1) vote for
each share held of record. There is no right to cumulative voting of shares
for the election of directors. The shares of Common Stock are not entitled to
pre-emptive rights and are not subject to redemption or assessment. Each share
of Common Stock is entitled to share ratably in distributions to shareholders
and to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefor. Upon liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to receive, pro-rata, the assets of the Company which are legally
available for distribution to shareholders. The issued and outstanding shares
of Common Stock are validly issued, fully paid and non-assessable.
PREFERRED STOCK
- ---------------
The Company is authorized to issue up to 5,000,000 shares of $.001 par
value Preferred Stock. The preferred stock of the corporation can be issued in
one or more series as may be determined from time-to-time by the Board of
Directors. In establishing a series, the Board of Directors shall give to it a
distinctive designation so as to distinguish it from the shares of all other
series and classes, shall fix the number of shares in such series, and the
preferences, rights and restrictions thereof. All shares of any one series
shall be alike in every particular. The Board of Directors has the authority,
without shareholder approval, to fix the rights, preferences, privileges and
restrictions of any series of preferred stock including, without limitation:
(1) the rate of distribution, (2) the price at and the terms and conditions on
which shares shall be redeemed, (3) the amount payable upon shares for
distributions of any kind, (4) sinking fund provisions for the redemption of
shares, (5) the terms and conditions on which shares may be converted if the
shares of any series are issued with the privilege of conversion, and (6)
voting rights except as limited by law.
Although the Company currently does not have any plans to issue shares of
Preferred Stock or to designate any series of Preferred Stock, there can be no
assurance that the Company will not do so in the future. As a result, the
Company could authorize the issuance of a series of Preferred Stock which would
grant to holders preferred rights to the assets of the Company upon
liquidation, the right to receive dividend coupons before dividends would be
declared to Common Stockholders, and the right to the redemption of such
shares, together with a premium, prior to the redemption to Common Stock. The
common shareholders of the Company have no redemption rights. In addition, the
Board could issue large blocks of voting stock to fend off unwanted tender
offers or hostile takeovers without further shareholder approval.
SERIES A CONVERTIBLE PREFERRED STOCK
- ------------------------------------
The Company has issued and outstanding 1,280,000 shares of Series A
Convertible Preferred Stock (the "Convertible Preferred Stock"), which were
issued to prior owners of the Colchester, Connecticut real estate. Holders of
shares of Convertible Preferred Stock have no voting rights and no rights to
compel the redemption of the shares. No dividends are payable on outstanding
shares of Convertible Preferred Stock. Each share of Convertible Preferred
Stock is convertible at the option of the holder into one share of Common Stock
(the "Conversion Stock") commencing July 23, 1997. However, each share of
Convertible Preferred Stock will convert automatically into one share of Common
Stock if the Conversion Shares are registered for sale under the Securities
Act. The Registration Statement of which this Prospectus forms a part includes
the registration for sale by the Company of the Conversion Shares issuable upon
the conversion of the Convertible Preferred Stock. Upon such automatic
conversion, holders of outstanding shares of Convertible Preferred Stock shall
have no further rights as Preferred Stockholders of the Company other than the
right to receive certificates evidencing the Conversion Shares issuable upon
such conversion.
CLASS BB WARRANTS
- -----------------
The Company has outstanding Class BB Warrants exercisable to purchase, in
the aggregate, 2,129,124 shares of Common Stock at an exercise price of $3.00
per share. The Class BB Warrants are exercisable at any time commencing on the
date of issuance and expiring on April 1, 1999. Upon expiration, the Class BB
Warrants will terminate automatically. The Company at any time and from time-
to-time may extend the Warrant term or reduce the Warrant exercise price,
provided written notice of such extension or reduction is given to the
registered holders of the Warrants prior to the expiration date then in effect.
The Company does not presently contemplate any extension of the Warrant term or
reduction of the Warrant exercise price.
The Warrants may be exercised during the Warrant Term only upon surrender
of the Warrant certificate at the offices of the Company with the form of
"Election to Purchase" on the reverse side of the Warrant certificate completed
and signed, accompanied by payment of the full Exercise Price for the number of
Warrants being exercised. Warrantholders will receive one share of Common
Stock for each Warrant exercised, subject to any adjustment required by the
Warrant Agreement. For a holder to exercise Warrants, there must be a current
Registration Statement in effect with the Commission and various state
securities authorities registering the shares of Common Stock underlying the
Warrants or, in the sole determination of the Company and its counsel, there
must be a valid exemption therefrom. The Company has undertaken, and intends,
to maintain a current Registration Statement which will permit the exercise of
the Warrants during the Warrant Term. Maintaining a current effective
Registration Statement could result in substantial expense to the Company and
there is no assurance that the Company will be able to maintain a current
Registration Statement covering the shares issuable upon exercise of the
Warrants. Holders of Warrants will have the right to exercise the Warrants
included therein for the purchase of shares of Common Stock only if a
Registration Statement is then in effect and only if the shares are qualified
for sale under securities laws of the state in which the exercising
warrantholder resides or if the Company, in its and its counsel's sole
discretion, is able to obtain valid exemptions from the foregoing requirements.
Although the Company believes that it will be able to register or qualify the
shares of Common Stock underlying the Warrants for sales in those states where
the Securities are offered, there can be no guarantee that such registration or
qualification, or an exemption therefrom, can be accomplished without undue
hardship or expense to the Company. The Warrants may be deprived of any value
if a Registration Statement covering the shares issuable upon exercise thereof
or an exemption therefrom cannot be filed or obtained without undue expense or
hardship or if such underlying shares are not registered or exempted from such
registration in the states in which the holder of a Warrant resides. In the
latter event, the only option available to a holder of a Warrant may be to
attempt to sell his or her Warrants into the market, if a market then exists
and only then in compliance with applicable securities laws and restrictions on
transfer.
TRANSFER AGENT, WARRANT AGENT AND REGISTRAR
- -------------------------------------------
The transfer agent, registrar and Warrant Agent for the Company's Common
Stock and Class BB Warrants is Corporate Stock Transfer, Inc., Denver,
Colorado.
REPORTS TO SHAREHOLDERS
- -----------------------
The Company intends to furnish annual reports to shareholders which will
include certified financial statements reported on by its certified public
accountants. In addition, the Company will issue unaudited quarterly or other
interim reports to shareholders as it deems appropriate.
LEGAL MATTERS
-------------
The legality of the Common Stock offered hereby will be passed on for the
Company by Neuman & Cobb, Temple-Bowron House, 1507 Pine Street, Boulder,
Colorado 80302. Clifford L. Neuman, a principal of the firm, is the beneficial
owner of 87,500 shares of Common Stock. Mr. Neuman is a Selling Securityholder
hereunder.
EXPERTS
-------
The consolidated financial statements and schedules of the Company as of
December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995, have been incorporated by reference herein and in the
Registration Statement and Prospectus in reliance upon the report of Schumacher
& Associates, Inc., Independent Certified Public Accountants, incorporated by
reference and upon the authority of said firm as experts in accounting and
auditing.
<PAGE>
- -------------------------------------- ---------------------------------------
No person is authorized to give
any information or to make any
representation other than those
contained in this Prospectus, and
if made such information or
representation must not be relied OPTIMAX INDUSTRIES, INC.
upon as having been given or
authorized. This Prospectus does 5,046,194 Shares
not constitute an offer to sell or
a solicitation of an offer to buy 1,700,000 Class BB Warrants
any securities other than the
Securities offered by this
Prospectus or an offer to sell
or a solicitation of an offer to
buy the Securities in any
jurisdiction to any person to
whom it is unlawful to make
such offer or solicitation in
such jurisdiction.
The delivery of this Prospectus
shall not, under any circumstances,
create any implication that there
has been no changes in the affairs
of the Company since the date of
this Prospectus. However, in the
event of a material change, this
Prospectus will be amended or
supplemented accordingly.
TABLE OF CONTENTS
Page
----
Available Information. . . . . . . 4
Incorporation by Reference . . . . 5
The Company. . . . . . . . . . . . 6 --------------------------------------
Risk Factors . . . . . . . . . . . 7 PROSPECTUS
Use of Proceeds. . . . . . . . . . 11 --------------------------------------
Selling Securityholder . . . . . . 11
Plan of Distribution . . . . . . . 12
Recent Developments. . . . . . . . 13 ---------------------------, 1996
Indemnification. . . . . . . . . . 16
Description of Securities. . . . . 17
Legal Matters. . . . . . . . . . . 18
Experts. . . . . . . . . . . . . . 18
- -------------------------------------- --------------------------------------
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
- ------------------------------------------------------
The estimated expenses of the offering, all of which are to be borne by
the Company, are as follows:
<TABLE>
<S> <C>
SEC Filing Fee $
Printing Expenses* 1,500.00
Accounting Fees and Expenses* 500.00
Legal Fees and Expenses* 7,500.00
Blue Sky Fees and Expenses* 5,000.00
Registrar and Transfer Agent Fee --
Miscellaneous * -----------
Total * $ 15,000.00
- ----------------------------
<FN>
* Estimated
</FN>
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ----------------------------------------------------
The only statute, charter provision, bylaw, contract, or other arrangement
under which any controlling person, director or officers of the Registrant is
insured or indemnified in any manner against any liability which he may incur
in his capacity as such, is as follows:
Sections 7-109-101 through 7-109-110 of the Colorado Corporation Code
provide as follows:
7-109-101. DEFINITIONS.
------------------------
As used in this article:
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation,
is or was serving at the corporation's request as a director,
officer, partner, trustee, employee, fiduciary, or agent of another
domestic or foreign corporation or other person or of an employee
benefit plan. A director is considered to be serving an employee
benefit plan at the corporation's request if his or her duties to the
corporation also impose duties on, or otherwise involve services by,
the director to the plan or to participants in or beneficiaries of
the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine, including an
excise tax assessed with respect to an employee benefit plan, or
reasonable expenses.
(5) "Official capacity" means, when used with respect to a director,
the office of director in a corporation and, when used with respect
to a person other than a director as contemplated in section 7-109-
107, the office in a corporation held by the officer or the
employment, fiduciary, or agency relationship undertaken by the
employee, fiduciary, or agent on behalf of the corporation.
"Official capacity" does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
7-109-102. AUTHORITY TO INDEMNIFY DIRECTORS.
---------------------------------------------
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to a proceeding
because the person is or was a director against liability incurred in
the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonable believed:
(I) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best
interests; and
(II) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the interests
of the participants in or beneficiaries of the plan is conduct that
satisfies the requirement of subparagraph (II) of paragraph (b) of
subsection (1) of this section. A director's conduct with respect to
an employee benefit plan for a purpose that the director did not
reasonably believe to be in the interests of the participants in or
beneficiaries of the plan shall be deemed not to satisfy the
requirements of paragraph (a) of subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the
standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not
involving action in an official capacity, in which proceeding the
director was adjudged liable on the basis that he or she derived an
improper personal benefit.
(5) Indemnification permitted under this section in connection with
a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
7-109-103. MANDATORY INDEMNIFICATION OF DIRECTORS.
---------------------------------------------------
Unless limited by its articles of incorporation, a corporation shall
indemnify a person who was wholly successful, on the merits or otherwise,
in the defense of any proceeding to which the person was a party because
the person is or was a director, against reasonable expenses incurred by
him or her in connection with the proceeding.
7-109-104. ADVANCE OF EXPENSES TO DIRECTORS.
---------------------------------------------
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of
final disposition of the proceeding if:
(a) The director furnishes to the corporation a written
affirmation of the director's good faith belief that he or she has
met the standard of conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written
undertaking, executed personally or on the director's behalf, to
repay the advance if it is ultimately determined that he or she did
not meet the standard of conduct; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification under
this article.
(2) The undertaking required by paragraph (b) of subsection (1) of
this section shall be an unlimited general obligation of the director
but need not be secured and may be accepted without reference to
financial ability to make repayment.
(3) Determinations and authorizations of payments under this section
shall be made in the manner specified in section 7-109-106.
7-109-105. COURT-ORDERED INDEMNIFICATION OF DIRECTORS.
-------------------------------------------------------
(1) Unless otherwise provided in the articles of incorporation, a
director who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application, the
court, after giving any notice the court considers necessary, may
order indemnification in the following manner:
(a) If it determines that the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonable
entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the standard of
conduct set forth in section 7-109-102 (1) or was adjudged liable in
the circumstances described in section 7-109-102 (4), the court may
order such indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability
shall have been adjudged in the circumstances described in section 7-
109-102 (4) is limited to reasonable expenses incurred in connection
with the proceeding and reasonable expenses incurred to obtain court-
ordered indemnification.
7-109-106. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION OF
DIRECTORS.
-----------------------------------------------------------------
(1) A corporation may not indemnify a director under section 7-109-
102 unless authorized in the specific case after a determination has
been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct
set forth in section 7-109-102. A corporation shall not advance
expenses to a director under section 7-109-104 unless authorized in
the specific case after the written affirmation and undertaking
required by section 7-109-104 (1) (a) and (1) (b) are received and
the determination required by section 7-109-104 (1) (c) has been
made.
(2) The determinations required by subsection (1) of this section
shall be made:
(a) By the board of directors by a majority vote of those present
at a meeting at which a quorum is present, and only those directors
not parties to the proceeding shall be counted in satisfying the
quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a
committee of the board of directors designated by the board of
directors, which committee shall consist of two or more directors not
parties to the proceeding; except that directors who are parties to
the proceeding may participate in the designation of directors for
the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a)
of subsection (2) of this section, and a committee cannot be
established under paragraph (b) of subsection (2) of this section,
or, even if a quorum is obtained or a committee is designated, if a
majority of the directors constituting such quorum or such committee
so directs, the determination required to be made by subsection (1)
of this section shall be made:
(a) By independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in paragraph
(a) or (b) of subsection (2) of this section or, if a quorum of the
full board cannot be obtained and a committee cannot be established,
by independent legal counsel selected by a majority vote of the full
board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall
be made in the same manner as the determination that indemnification
or advance of expenses is permissible; except that, if the
determination that indemnification or advance of expenses is
permissible is made by independent legal counsel, authorization of
indemnification and advance of expenses shall be made by the body
that selected such counsel.
7-109-107. INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND
AGENTS.
--------------------------------------------------------------------
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under
section 7-109-103, and is entitled to apply for court-ordered
indemnification under section 7-109-105, in each case to the same
extent as a director;
(b) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the same
extent as to a director; and
(c) A corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a
greater extent, if not inconsistent with public policy, and if
provided for by its bylaws, general or specific action of its board
of directors or shareholders, or contract.
7-109-108. INSURANCE.
----------------------
A corporation may purchase and maintain insurance on behalf of a person
who is or was a director, officer, employee, fiduciary, or agent of the
corporation, or who, while a director, officer, employee, fiduciary, or
agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, fiduciary,
or agent of another domestic or foreign corporation or other person or of
an employee benefit plan, against liability asserted against or incurred
by the person in that capacity or arising from his or her status as a
director, officer, employee, fiduciary, or agent, whether or not the
corporation would have power to indemnify the person against the same
liability under section 7-109-102, 7-109-103, or 7-109-107. Any such
insurance may be procured from any insurance company designated by the
board of directors, whether such insurance company is formed under the
laws of this state or any other jurisdiction of the United States or
elsewhere, including any insurance company in which the corporation has an
equity or any other interest through stock ownership or otherwise.
7-109-109. LIMITATION OF INDEMNIFICATION OF DIRECTORS.
-------------------------------------------------------
(1) A provision treating a corporation's indemnification of, or
advance of expenses to, directors that is contained in its articles
of incorporation or bylaws, in a resolution of its shareholders or
board of directors, or in a contract, except an insurance policy, or
otherwise, is valid only to the extent the provision is not
inconsistent with sections 7-109-101 to 7-109-108. If the article of
incorporation limit indemnification or advance of expenses,
indemnification and advance of expenses are valid only to the extent
not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with an appearance as a witness in a proceeding at a time
when he or she has not been made a named defendant or respondent in
the proceeding.
7-109-110. NOTICE TO SHAREHOLDER OF INDEMNIFICATION OF DIRECTOR.
-----------------------------------------------------------------
If a corporation indemnifies or advances expenses to a director under this
article in connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice of the
indemnification or advance to the shareholders with or before the notice
of the next shareholders' meeting. If the next shareholder action is
taken without a meeting at the instigation of the board of directors, such
notice shall be given to the shareholders at or before the time the first
shareholder signs a writing consenting to such action.
* * *
b. Article XII of Registrant's Articles of Incorporation provide that
the corporation may indemnify each director, officer, and any employee or agent
of the corporation, his heirs, executors and administrators, against expenses
reasonably incurred or any amounts paid by him in connection with any action,
suit or proceeding to which he may be made a party by reason of his being or
having been a director, officer, employee or agent of the corporation to the
extent permitted by the law as recited above in subparagraph (a).
c. Article XII of Registrant's Articles of Incorporation provides, in
part:
"e. To the maximum extent permitted by law or by public policy,
directors of this Corporation are to have no personal liability for
monetary damages for breach of fiduciary duty as a director."
d. The Company currently pays for and maintains an insurance policy in
the amount of $2,000,000 that covers directors' and officers' liability.
e. The Registration Rights between the Company and the Selling
Securityholder provides that the Selling Securityholder will indemnify and hold
harmless the Company, the directors of the Company, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act of
1933, as amended (the "1933 Act"), against any and all losses, claims, demands,
liabilities and expenses (including reasonable legal or other expenses) to
which it may become subject, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, or in any Blue Sky Application, or the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, resulting from the use of written
information furnished to the Company by the Selling Securityholder for use in
the preparation of the Registration Statement, or in any Blue Sky Application.
ITEM 16. EXHIBITS.
- -------------------
a. The following Exhibits are filed as part of this Registration
Statement pursuant to Item 601 of Regulation SK:
EXHIBIT NO. TITLE
- ----------- -----
* 3.1 Articles of Incorporation
* 3.2 By-Laws
* 4.1 Specimen Common Stock Certificate
** 4.2 Specimen Class BB Warrant Certificate
4.3 Certificate of Rights and Designations of Series A Convertible
Preferred Stock
5.1 Opinion of Neuman & Cobb
*** 10.1 Agreement for Settlement of Litigation and Grant of Warrant
*** 10.2 Amendment No. 1 to Agreement for Settlement of Litigation and
Grant of Warrant
24.1 Consent of Schumacher & Associates, Inc.
24.2 Consent of Neuman & Cobb
____________________________
* Incorporated by reference from the Company's Registration Statement on
Form S-1, SEC File No. 0-19082.
** Incorporated by reference from the Company's Current Report on Form 8-K
dated July 23, 1996, as filed with the Commission on July 23, 1996.
*** Incorporated by reference from the Company's Registration Statement on
Form S-3, SEC File No. 33-98270, as filed with the Commission on
November 2, 1995.
ITEM 17. UNDERTAKINGS.
- -----------------------
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel that 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.
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.
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.
4. To provide, upon effectiveness, certificates in such denominations
and registered in such names as are required to permit prompt delivery to each
purchaser.
<PAGE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized. In the City of Boston, State of Massachusetts on the 6th of
November, 1996.
OPTIMAX INDUSTRIES, INC., a Colorado corporation
By: /s/ David W. Dube
-----------------------------------------
David W. Dube, President
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities with Optimax Industries, Inc. and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ David W. Dube President, Director, 11/6/96
- ------------------------------ Chief Executive Officer, ---------
David W. Dube Chief Financial Officer,
Chief Accounting Officer
/s/ Stephen G. Calandrella Director 11/6/96
- ------------------------------ ---------
Stephen G. Calandrella
<PAGE>
CERTIFICATE OF DESIGNATION OF
RIGHTS AND PREFERENCES OF SERIES A
CONVERTIBLE PREFERRED STOCK
OF OPTIMAX INDUSTRIES, INC.
Pursuant to Section 7-106-102 of the
General Corporation Law of the State of Colorado
- -------------------------------------------------------------------------------
OPTIMAX INDUSTRIES, INC., a corporation organized and existing under the
laws of the State of Colorado (the "Company"), DOES HEREBY CERTIFY that
pursuant to the authority contained in its Articles of Incorporation, as
amended, and in accordance with the provisions of the General Corporation Law
of the State of Colorado, the Company's Board of Directors has duly adopted the
following resolution creating a series of the class of its authorized Preferred
Stock, designated as Series A Convertible Preferred Stock:
RESOLVED THAT:
Whereas, by virtue of the authority contained in its Articles of
Incorporation, as amended, the Company has the authority to issue Five
Million (5,000,000) shares of $.001 par value Preferred Stock, the
designation and amount thereof and series, together with the powers,
preferences, rights, qualifications, limitations or restrictions thereof,
to be determined by the Board of Directors pursuant to the applicable law
of the State of Colorado;
Now therefore, the Company's Board of Directors hereby establishes a
series of the class of Preferred Stock authorized to be issued by the
Company as above stated, with the designations and amounts thereof,
together with the voting powers, preferences and relative, participating,
optional and other special rights of the shares of each such series, and
the qualifications, limitations or restrictions thereof, to be as follows:
1. DESIGNATIONS AND AMOUNTS.
------------------------
One Million Two Hundred Eighty Thousand (1,280,000) shares of the
Company's authorized Preferred Stock are designated as Series A Convertible
Preferred Stock.
2. DEFINITIONS.
-----------
For the purposes of this Resolution the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Optimax Industries, Inc., a Colorado
corporation.
(c) "Original Issue Date" for a series of Preferred Stock shall mean
the date on which the first share of such series of Preferred Stock
was originally issued.
(d) "Preferred Stock" shall refer to Series A Convertible Preferred
Stock.
(e) "Common Stock" shall refer to the Company's $.02 par value
common stock.
(f) "Subsidiary" shall mean any corporation at least 50% of whose
outstanding voting stock shall at the time be owned directly or
indirectly by the Company or by one or more Subsidiaries.
<PAGE>
<PAGE>
3. DIVIDENDS.
---------
The holders of outstanding Preferred Stock shall not be entitled to
receive any dividends by virtue of their beneficial ownership of Preferred
Stock, but rather shall be entitled to participate, pro rata, in dividends
paid on outstanding shares of Common Stock, if, when and as the Board of
Directors shall in their sole discretion deem advisable, and only from the
net profits or surplus of the Company as such shall be fixed and
determined by the Board of Directors. The determination of the Board of
Directors at any time of the amount of net profits or surplus available
for dividend shall be binding and conclusive on the holders of all the
stock of the Company at the time outstanding.
4. LIQUIDATION RIGHTS.
------------------
(a) In the event of any liquidation, dissolution, or winding up of
the Company, whether voluntary or involuntary, the holders of each
share of Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Company available for distribution to
its shareholders, before any payment or declaration and setting apart
for payment of any amount shall be made in respect to any outstanding
preferred stock ranking junior to the Preferred Stock or the Common
Stock, an amount equal to $1.25 per share. If upon any liquidation,
dissolution, or winding up of the Company, whether voluntary or
involuntary, the assets to be distributed to the holders of the
Preferred Stock shall be insufficient to permit the payment to such
shareholders of the full preferential amount aforesaid, then all of
the assets of the Company available to be distributed shall be
distributed ratably to the holders of the Preferred Stock.
(b) After the payment or distribution to the holders of the
Preferred Stock of the full preferential amounts aforesaid, the
holders of any preferred stock rank junior to the Preferred Stock and
the Common Stock then outstanding shall be entitled to receive all of
the remaining assets of the Company.
(c) Neither a consolidation, merger or reorganization of the
Company, a sale or other transfer of all or substantially all of its
assets, nor a sale of fifty percent (50%) or more of the Company's
capital stock then issued and outstanding nor the purchase or
redemption by the Company of stock of any class, nor the payment of a
dividend or distribution from net profits or surplus of the Company
shall be treated as or deemed to be a liquidation hereunder.
5. REDEMPTION.
----------
Neither the Company nor any holder of Preferred Stock shall have the
right to redeem, or demand the redemption of, as the case may be, any of
the outstanding Preferred Stock.
6. VOTING RIGHTS.
-------------
Holders of Preferred Stock shall have no right to vote on any matter
voted upon by the holders of outstanding shares of Common Stock at any
regular or special meeting of shareholders.
<PAGE>
<PAGE>
7. CONVERSION.
----------
The Preferred Stock shall have the following conversion rights (the
"Conversion Rights"):
(a) OPTIONAL CONVERSION.
-------------------
For the period commencing one (1) year from the date of issuance
and ending five (5) years from the date of issuance, holders of
outstanding shares of Preferred Stock shall have an option to convert
each share of Preferred Stock into shares of the Company's Common
Stock (the "Conversion Stock"), at any time, at a conversion value of
One and 25/100 Dollars ($1.25) per share of Common Stock.
(b) AUTOMATIC CONVERSION.
--------------------
The foregoing notwithstanding, the outstanding shares of
Preferred Stock shall be automatically converted into shares of
Common Stock upon the effective date of a Registration Statement
("Registration Statement") to be filed by the Company with the
Securities and Exchange Commission ("Commission") registering for
sale the issuance of the Conversion Stock. In the event of such
automatic conversion, the conversion value shall be $1.25 per share.
(c) MECHANICS OF CONVERSION.
-----------------------
The conversion of all outstanding shares of Preferred Stock to
Common Stock shall occur automatically upon the effective date of the
Registration Statement ("Triggering Event"). The Company shall,
within ten (10) days of the Triggering Event, provide written notice,
first class postage pre-paid, to each holder of record of the
Preferred Stock to be converted, at his post office address last
shown on the records of the Company, of the conversion (the
"Conversion Notice"). The Conversion Notice shall state:
(i) That all of the holder's outstanding shares
of Preferred Stock were converted;
(ii) The number of shares of Preferred Stock held
by the holder that were converted;
(iii) The effective date of the Conversion
(the "Conversion Date") and the number of shares
of Common Stock which the holder will receive;
and
(iv) That the holder is to surrender to the
Company, in the manner and at the place
designated, his certificate or certificates
representing the shares of Preferred Stock
converted.
Thereafter, each holder of Preferred Stock to be converted shall
surrender the certificate or certificates representing such shares to
the Company, in the manner and at the place designated in the
Conversion Notice, and thereupon the requisite number of shares of
<PAGE>
<PAGE>
Common Stock shall be issued in the name of the person whose name
appears on the surrendered certificate or certificates as the owner
thereof, and each surrendered certificate shall be cancelled and
retired. Notwithstanding that the certificates evidencing any of the
shares of Preferred Stock shall not have been surrendered, all rights
with respect to such shares shall forthwith after the Conversion
Date, terminate, except only the right of the holders to receive the
appropriate number of shares of Common Stock upon surrender of their
certificate or certificates therefor.
(d) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS.
--------------------------------------------
If the Company shall at any time or from time to time after the
Original Issue Date for a series of the Preferred Stock effect a
subdivision of the outstanding Common Stock, the Conversion Value
then in effect immediately before that subdivision shall be
proportionately decreased, and conversely, if the Company shall at
any time or from time to time after the Original Issue Date for a
series of the Preferred Stock combine the outstanding shares of
Common Stock, the Conversion Value then in effect immediately before
the combination shall be proportionately increased. Any adjustment
under this Paragraph 7(d) shall become effective at the close of
business on the date the subdivision or combination becomes
effective.
(e) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION.
----------------------------------------------------------
If the Common Stock issuable upon the conversion of the
Preferred Stock shall be changed into the same or a different number
of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets
provided for elsewhere in this Paragraph 7), then and in each such
event the holder of each share of Preferred Stock shall have the
right thereafter to convert such share into the kind and amount of
shares of stock and other securities and property receivable upon
such reorganization, reclassification, or other change, by holders of
the number of shares of Common Stock into which such shares of
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further
adjustments as provided herein.
(f) REORGANIZATION, MERGERS, CONSOLIDATIONS, OR SALES OF ASSETS.
-----------------------------------------------------------
If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision,
combination, reclassification, or exchange of shares provided for
elsewhere in this Paragraph 7) or a merger or consolidation of the
Company with or into another corporation, or the sale of all or
substantially all of the company's assets to any other person, then,
as a part of such reorganization, merger, consolidation, or sale,
provision shall be made so that the holders of the Preferred Stock
shall thereafter be entitled to receive upon conversion of the
Preferred Stock, the number of shares of stock or other securities or
<PAGE>
<PAGE>
property of the Company, or of the successor corporation resulting
form such merger or consolidation or sale, to which a holder of
Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation, or sale. In any
such case, appropriate adjustment shall be made in the application of
the provisions of this Paragraph 7 with respect to the rights of the
holders of the Preferred Stock after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Paragraph 7 (including adjustment of the Conversion Value then in
effect and the number of shares purchasable upon conversion of the
Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.
(g) DEFINITION.
----------
The term "Additional Shares of Common Stock" as used herein
shall mean all shares of Common Stock issued or deemed issued
(including a right or option to purchase Common Stock, or shares of
stock or an obligation convertible into Common Stock) by the Company
after the Original Issue Date for a series of Preferred Stock,
whether or not subsequently reacquired or retired by the Company,
other than (1) shares of Common Stock, and (2) shares or other
securities issued to employees, officers, directors, consultants or
other persons performing services for the Company pursuant to any
stock offering, option, plan, or arrangement approved by the Board of
Directors of the Company.
(h) NOTICES OF RECORD DATE.
----------------------
In the event of (i) any taking by the Company of a record of the
holders of any class or series of securities for the purpose of
determining the holders thereof who are entitled to receive any
dividend or other distribution or (ii) any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company, or any transfer of all or substantially
all of the assets of the Company to any other corporation, entity, or
person, or any voluntary or involuntary dissolution, liquidation, or
winding up of the Company, the Company shall mail to each holder of
Preferred Stock at least 30 days prior to the record date specified
therein, a notice specifying (A) the date on which any such record is
to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on which
any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation, or winding up is expected to become
effective, and (C) the time, if any is to be fixed, as to when the
holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other
securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation, or winding up.
(i) FRACTIONAL SHARES.
-----------------
No fractional shares of Common Stock shall be issued upon
conversion of Preferred Stock. In lieu of any fractional shares to
<PAGE>
<PAGE>
which the holder would otherwise be entitled, the Company shall pay
cash equal to the product of such fraction multiplied by the fair
market value of one share of the Company's Common Stock on the date
of conversion, as determined in good faith by the Board.
(j) NOTICES.
-------
Any notice required by the provisions of this Paragraph 7 to be
given to the holder of shares of the Preferred Stock shall be deemed
given when personally delivered to such holder or five (5) business
days after the same has been deposited in the United States mail,
certified or registered mail, return receipt requested, postage
prepaid, and addressed to each holder of record at his address
appearing on the books of the Company.
(k) PAYMENT OF TAXES.
----------------
The Company will pay all taxes and other governmental charges
that may be imposed in respect of the issue or delivery of shares of
Common Stock upon conversion of shares of Preferred Stock.
(l) NO DILUTION OR IMPAIRMENT.
-------------------------
The Company shall not amend its Articles of Incorporation or
participate in any reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other
voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good
faith assist in carrying out all such action as may be reasonably
necessary or appropriate in order to protect the conversion rights of
the holders of the Preferred Stock against dilution or other
impairment.
8. NO PREEMPTIVE RIGHTS.
--------------------
No holder of the Series A Preferred Stock of the Corporation shall be
entitled, as of right, to purchase or subscribe for any part of the
unissued stock of the Corporation or of any stock of the Corporation to be
issued by reason of any increase of the authorized capital stock of the
Corporation, or to purchase or subscribe for any bonds, certificates of
indebtedness, debentures or other securities convertible into or carrying
options or warrants to purchase stock or other securities of the
Corporation or to purchase or subscribe for any stock of the Corporation
purchased by the Corporation or by its nominee or nominees, or to have any
other preemptive rights now or hereafter defined by the laws of the State
of Colorado.
9. NO REISSUANCE OF PREFERRED STOCK.
--------------------------------
No share or shares of Preferred Stock acquired by the Company by
reason of purchase, conversion, or otherwise shall be reissued, and all
such shares shall be cancelled, retired, and eliminated from the shares
which the Company shall be authorized to issue.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, said OPTIMAX INDUSTRIES, INC, has caused this
Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock to be duly executed by its President and attested by its
Secretary and has caused its corporate seal to be affixed hereto, this _____
day of __________________, 1996.
OPTIMAX INDUSTRIES, INC.
Attest
By: /s/ Paul Stevens
- ------------------------------- ---------------------------------
Secretary Paul Stevens, President
[Corporate Seal]
November 4, 1996
Optimax Industries, Inc.
132 Lincoln Street
Boston, Massachusetts 02111
Re: S.E.C. Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Optimax Industries, Inc. (the "Company") in
connection with a Registration Statement to be filed with the United Stated
Securities and Exchange Commission, Washington, D.C., pursuant to the
Securities Act of 1933, as amended, covering the registration of an aggregate
of 5,046,194 shares of the Company's $0.02 par value common stock (the "Common
Stock") and 1,700,000 Class BB Common Stock Purchase Warrants of the Company
("BB Warrants"). In connection with such representation of the Company, we
have examined such corporate records, and have made such inquiry of government
officials and Company officials and have made such examination of the law as we
deemed appropriate in connection with delivering this opinion.
Based upon the foregoing, we are of the opinion as follows:
1. The Company has been duly incorporated and organized under the laws
of the State of Colorado and is validly existing as a corporation in good
standing under the laws of that state.
2. The Company's authorized capital consists of twenty million
(20,000,000) shares of Common Stock having a par value of $0.02 each and five
million (5,000,000) shares of Preferred Stock having a par value of $.001 each.
3. The 3,766,194 shares of Common Stock and the 1,700,000 BB Warrants
being registered for resale and offered by the Selling Securityholders are
lawfully and validly issued, fully paid and non-assessable shares of the
Company's Common Stock.
4. The 1,280,000 shares of Common Stock issuable upon conversion of the
outstanding Series A Convertible Preferred Stock will, upon the due conversion
thereof, be lawfully and validly issued, fully paid and non-assessable shares
of the Company's Common Stock.
Sincerely,
Clifford L. Neuman
CLN:at
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We have issued our report dated March 16, 1996, accompanying the financial
statements of Optimax Industries, Inc. and consolidated subsidiaries in the
Registration Statement. We consent to the use of the aforementioned report
incorporated by reference in the Registration Statement Form S-3.
/s/ Schumacher & Associates, Inc.
SCHUMACHER & ASSOCIATES, INC.
12835 East Arapahoe Road
Tower II, Suite 110
Englewood, CO 80112
November 1, 1996
November 4, 1996
Optimax Industries, Inc.
4465 Northpark Drive
Colorado Springs, CO 80907
Re: S.E.C. Registration Statement on Form S-3
Ladies and Gentlemen:
We hereby consent to the inclusion of our opinion regarding the legality
of the securities being registered by the Registration Statement to be filed
with the United Stated Securities and Exchange Commission, Washington, D.C.,
pursuant to the Securities Act of 1933, as amended, by Optimax Industries,
Inc., a Colorado corporation, in connection with its offering of up to
5,046,194 shares of Common Stock, $.02 par value, and 1,700,000 Class BB
Warrants, as proposed and more fully described in such Registration Statement.
We further consent to the reference in such Registration Statement to our
having given such opinions.
Sincerely,
Clifford L. Neuman
CLN:at
