As filed with the Securities and Exchange Commission on May 27, 1999
Registration Number 333-75401
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Compositech Ltd.
(Exact name of registrant as specified in its charter)
Delaware 11-2710467
(State of incorporation) (I.R.S. Employer Identification No.)
120 Ricefield Lane, Hauppauge, NY 11788 - (516) 436-5200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Samuel S. Gross
Executive Vice President, Secretary and Treasurer
120 Ricefield Lane, Hauppauge, NY 11788 - (516) 436-5200
(Address, including zip code, and telephone number, including area code,
of agent for service)
With a copy to:
Edward F. Cox, Esq.
Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas, New York, NY 10036-6710 (212) 336-2000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the 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 being 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 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>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of Each Class Amount of Proposed Maximum Proposed Maximum Amount of
of Securities to be shares to be Offering Price Aggregate Offering Registration
Registered Registered Per Share (1) Price (1) Fee (1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock ............................. 1,633,657(2) $ 2.109 $3,445,383
($0.01 par value)
Common stock ............................. 949,022(4) $ 2.109 $2,001,487
($0.01 par value) (3)
Common stock ............................. 275,040(4) $ 2.125 $ 584,460
($0.01 par value) (5)
Common stock ............................. 75,000(4) $ 2.6125 $ 195,938
($0.01 par value) (6)
Common stock ............................. 36,000(4) $ 3.000 $ 108,000
($0.01 par value) (7)
- -----------------------------------------------------------------------------------------------------------------------------
Totals 2,968,719 $6,335,268 $ 1,762(8)
=============================================================================================================================
</TABLE>
(1) The maximum offering price of $2.109 per share for the 1,646,157 shares of
common stock, of Compositech Ltd was based upon the average of the high and
low prices of the common stock of Compositech reported by The Nasdaq
SmallCap(SM) Market for its common stock on March 25, 1999, (in accordance
with Sections (c) and (g) of Rule 457 of Regulation C). The maximum
offering price of $2.109 is used for the 949,022 shares of common stock
underlying warrants with exercise prices of $1.125 , $2.035 and $2.053 ,
since it is higher than the exercise price of such warrants. The maximum
offering price per share of $2.125, $2.6125 and $3.00, for the 275,040,
75,000 and 36,000, respectively, shares of common stock underlying the
warrants with exercise prices of $2.125, $2.6125 and $3.00, equals their
respective exercise price, since in each case it is higher than the average
of the high and low prices of the common stock of Compositech, reported by
The Nasdaq SmallCap(SM) Market for its common stock on March 25, 1999, (in
accordance with Section (g) of Rule 457 of Regulation C).
(2) Represents 1,554,301 shares of common stock issued pursuant to a private
placement of Compositech's common stock, which had its final closing on
March 26, 1999 and 79,356 shares of common stock issued as compensation in
connection with a loan financing which had its final closing in January
1999.
(3) Represents (i) 475,635 shares of common stock underlying common stock
purchase warrants, exercisable at $1.125 per share until February 15, 2001;
(ii) 36,855 shares of common stock underlying common stock purchase
warrants, exercisable at $2.035 per share until February 15, 2001; (iii)
36,532 shares of common stock underlying common stock purchase warrants,
exercisable at $2.053 per share until February 15, 2001; and (iv) 400,000
shares of common stock underlying common stock purchase warrants,
exercisable at $1.25 per share until January 12, 2004. All of these
warrants, excluding the warrants exercisable at $1.25 per share which were
issued in exchange for consulting services, were issued pursuant to a
private placement of common stock which had its final closing on March 26,
1999.
(4) Pursuant to Rule 416 of the Securities Act, there are also being registered
hereunder such indeterminate number of additional shares as may be issued
to the selling stockholders because of future dividends, stock
distributions, stock splits or similar capital adjustments, or exercise
price adjustments pursuant to the terms of the common stock purchase
warrants.
(5) Represents shares of common stock underlying common stock purchase
warrants, exercisable at $2.125 per share until February 15, 2001, issued
pursuant to a private placement of common stock which had its final closing
on March 26, 1999.
(6) Represents shares of common stock underlying the common stock purchase
warrants, exercisable at $2.6125 per share until April 24, 2003, issued as
compensation in connection with Compsitech's final conversion of its 5%
Convertible Debentures, which occurred in April 1998
(7) Represents shares of common stock underlying the common stock purchase
warrants, exercisable at $3.00 per share until August 3, 2000, issued to
several stockholders in connection with a private placement of
Compositech's common stock in 1995.
(8) $1,762 was previously paid with the initial filing of this registration
statement.
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 or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any State where the offer or sale is not permitted.
Subject to Completion, dated May ___, 1999
PROSPECTUS
COMPOSITECH LTD.
2,968,719 Shares of Common Stock
--------------------------------------
The selling stockholders named in this prospectus are offering and selling
up to 2,968,719 shares of the common stock of Compositech Ltd. The selling
stockholders who currently own the shares, acquired the shares as follows:
o 1,554,301 shares in a private placement which had its final closing on
March 26, 1999; and
o 79,356 shares as compensation in connection with a loan financing.
The selling stockholders who currently own warrants to acquire the shares,
may acquire 1,335,062 shares upon exercise of the warrants.
The number of shares of common stock issuable upon exercise of the warrants
is subject to adjustment in certain events. The number of shares offered for
sale is based on the number of shares to be registered according to the
agreements with the stockholders.
The prices at which the selling stockholders may sell the shares of common
stock will be determined by prevailing market prices for the shares or by
negotiated transactions. We will not receive any of the proceeds from the sale
of shares, but will receive the exercise price of the warrants.
Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
"CTEK". On May 24, 1999, the closing sales price of our common stock on The
Nasdaq SmallCap Market was $1.813.
--------------------------------------
YOU SHOULD READ THE DESCRIPTION OF CERTAIN RISKS UNDER THE CAPTION "RISK
FACTORS" BEGINNING ON PAGE 6 BEFORE PURCHASING OUR COMMON STOCK.
--------------------------------------
Neither The Securities And Exchange Commission Nor Any State Securities
Commission Has Approved Or Disapproved These Securities Or Passed Upon The
Accuracy Or Adequacy Of This Prospectus. Any Representation To The Contrary Is A
Criminal Offense.
The date of this prospectus is May ___, 1999.
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INFORMATION ABOUT COMPOSITECH LTD.
Compositech manufactures innovative and superior copper-clad fiberglass
epoxy laminates used to make printed circuit boards. Printed circuit boards are
important parts of:
o personal computers;
o workstations;
o data communication equipment;
o internet servers; and
o telecommunications equipment.
A continuing trend in electronics is to put more features in products while
reducing their size. This has caused the printed circuit board industry to put
more demands on the laminates they use. Laminates have to be stronger, more
uniform electrically and stand higher temperatures.
We invented a filament wound process for making laminates that uses the
same raw materials as other conventional laminates. Other laminates use
fiberglass cloth as a reinforcement. However, the weave pattern from the
fiberglass cloth used as the reinforcement in other laminates makes a rough
surface. Compositech's CL200+ laminates made with its filament winding process
are smoother and stronger and do not change size as much as other laminates in
processing. Compositech laminates have a higher thermal rating than similar
laminates, meaning they can stand higher temperatures during processing.
Management believes that based on our tests and tests by customers and
other users, the benefits of our laminates should enable printed circuit board
manufacturers to:
o decrease costs by reducing waste in the making of existing board
designs because Compositech laminates are more stable, consistent and
smoother and can stand higher temperatures; and
o produce large printed circuit boards with a high number of layers
because Compositech laminates are more stable and consistent during
processing.
Our laminates also enable the OEM end users of printed circuit boards to speed
up the development of new products requiring denser circuitry by permitting
features to be put closer together.
Compositech aims to be the leading manufacture of copper-clad fiberglass
epoxy laminates for printed circuit boards used for electronic equipment.
Compositech expects to do this by using its patented and proprietary products
and processes worldwide. Compositech is focusing on the multilayer/high
performance laminate part of the market. In 1997, this market was $2.1 billion
worldwide according to IPC, a trade organization. The United States' share was
$988 million and had a 25% growth rate.
We have 29 patents in the United States and other major industrial
countries. Our patents cover:
o our laminates;
o the process we use to make our laminates; and
o the equipment we use to make our laminates.
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We have a 50/50 joint venture with institutional investors that will
manufacture our laminates in Canada. We also granted a license to a Taiwanese
investor group to manufacture Compositech's laminates in Taiwan. We have a 10%
equity interest in this joint venture.
Compositech's marketing efforts are directed to expanding good working
relations with leading-edge producers of printed circuit boards in North
America. Compositech has sold its CL200+ laminates to a select group of these
companies. We encouraged benchmark comparisons of our laminates with competitive
laminates. In virtually all of these comparisons, CL 200+ was superior to
current laminates. Recently, sales have been affected by delays in testing and
qualification programs from major customers.
During 1998, we received orders from Teradyne, Inc. to enable them to do
extensive testing and qualification of our laminate for production of their
backplanes. Backplanes are used in internet servers and telecommunications
equipment and are planned to have as many as 64 layers. In April 1999, Sun
Microsystems, an end user of printed circuit boards, approved the use of
Compositech's CL200+ laminates in the manufacture of printed circuit boards for
its use.
Compositech sells to circuit board manufacturers in the United States and
Canada with its own sales force and six independent sales representatives.
Internationally, Compositech plans to export its products and license
appropriate strategic partners.
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RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors, together with all of the other information included in this
prospectus, including the documents that we incorporate by reference, before you
decide to purchase shares of our common stock.
We May Not Be Able to Achieve Commercial Acceptance of Our Product or Generate
Sufficient Revenues to Make a Profit
Compositech was a development stage company through December 31, 1996, has
had limited revenues from the sale of laminates, has incurred significant losses
and has had substantial negative cash flow since its inception.
As of December 31, 1998, we had an accumulated deficit of $33,954,155. Our
independent auditors have included an explanatory paragraph in their report
covering the December 31, 1998 financial statements, which expresses substantial
doubt about our ability to continue as a going concern.
We will require additional funding to cover operating expenses and
expenditures for additional equipment until revenues from operations are
sufficient for these purposes. We expect that significant operating losses will
continue for a substantial part of 1999. We cannot assure you that we will
successfully complete expansion and enhancements of our production equipment,
achieve broad commercial acceptance of our product or generate sufficient
revenues to achieve profitable operations.
We Need Additional Financing Which May Dilute Stockholders' Ownership
Percentages; If Funding Is Not Available, We May Have to Limit Our Operations
Compositech's available funds, without giving effect to alternative sources
of funding, are not sufficient to raise our production level to profitability or
provide sufficient working capital for expansion of sales. We will need
additional funding for operations in 1999 which may be raised through sources
including:
o license fees;
o sales of equipment in connection with licensing operations;
o joint ventures or other collaborative relationships; or
o equity or debt financing.
We cannot assure you that additional funding will be sufficient and
available or, if it is available, that it will be available on acceptable terms.
If additional funds are raised through the issuance of equity securities or
securities convertible into equity securities, the percentage ownership of then
current stockholders of Compositech will be reduced and such securities may have
rights, preferences or privileges senior to those of the holders of common
stock.
If adequate funds are not available to satisfy either our short-term or
long-term capital requirements, Compositech may be required to limit its
operations significantly.
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<PAGE>
We Could Lose Our Patents and Certain Production Equipment If We Default on
Notes and Can't Extend Them
Compositech's patents and certain other assets are subject to liens
securing outstanding debt as follows:
o notes payable to stockholders in the amount of $100,000 and notes payable
to stockholders/directors/officers in the amount of $675,000 due January 2,
2000, as extended, are collateralized by a second lien on U.S. Patents and
Patent Applications;
o notes payable to stockholders/directors/officers in the amount of
$745,000 due January 2, 2000, as extended, are collateralized by a first
lien on Compositech's patents, patent applications and certain production
equipment; and
o term notes of $930,000 obtained in March 1999 and April 1999 are
collateralized by four pieces of production equipment.
If we default on our notes, we could lose all or most of our patents and
certain production equipment. The potential loss of these assets could force us
to negotiate new and disadvantageous terms to extend the terms of such notes.
We May Not Be Able to Compete Successfully Against Some Large Competitors
The laminate manufacturing business is highly competitive. Our competitors
include major corporations, such as General Electric Company and AlliedSignal
Inc., which have substantial financial, marketing and technical resources. In
1994, we granted patent immunity on our product patents to AMP and Akzo
Electronics Products NV, which, at the time, were operating a joint venture
which was developing a new process to make linear laminates.
The future success of Compositech will depend on its ability to effectively
market its products against competitors with potentially greater resources. We
cannot assure you that we will be able to compete successfully in the future.
We May Fail to Manage Our Growth Effectively
Compositech intends to expand significantly its overall level of
operations. Any such expansion, however, is expected to strain our management,
technical, financial and other resources. To manage growth effectively, we must:
o add manufacturing capacity;
o add personnel;
o maintain a high level of quality;
o achieve good manufacturing efficiency; and
o expand, train and manage our employee base.
Compositech's failure to add capacity and manage growth effectively could
have a material adverse effect on our business, financial condition and results
of operations.
We May Not Be Able to Attract and Retain The Key Personnel We Need to Succeed
We believe that our success will depend to a significant extent upon the
efforts of our executive officers and senior management as well as our ability
to attract and retain highly qualified managerial, technical and sales
personnel. Compositech maintains and is
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the beneficiary of a $2 million key person life insurance policy on Jonas
Medney, our Chairman.
The loss or unavailability of our executive officers or other senior
management or the inability to attract, assimilate or retain such personnel in
the future could have a material adverse effect on our business, financial
condition and results of operations.
Our Dependence on a Single Manufacturing Facility May Affect Our Ability to
Obtain and Service Large Orders; Disruptions May Limit Our Operations
Compositech's current laminate manufacturing operations are in one building
in Hauppauge, New York, although the joint venture in Montreal plans to build an
additional larger plant in Montreal and the joint venture in Taiwan plans to
build a third plant.
Because currently Compositech does not operate multiple facilities in
different geographic areas, the ability to obtain and service large orders or
time sensitive orders may be affected. Further, a disruption of Compositech's
manufacturing operations resulting from sustained process abnormalities, human
error, government intervention or a natural disaster such as fire, earthquake or
flood could cause Compositech to cease or limit its manufacturing operations.
This could have a material adverse effect on Compositech's business, financial
condition and results of operations.
Lack of Production Experience May Negatively Impact Quality and Costs; Process
Disruptions Could Have A Negative Effect on Operations
Compositech has limited experience in producing laminates on its
production-scale modules. We recently added production modules to increase
production levels and achieve economies of scale. This expansion is the first
production-scale expansion undertaken by Compositech, and consequently we cannot
assure you that our production facilities will meet our production targets in a
timely way or that the resultant product will meet the high commercial standard
needed for successful market penetration. Furthermore, the expanded production
facilities may not be able to provide adequate efficiencies or produce high
yields. In addition, the costs of production may not be as low as management
expects, in which case we may not achieve profitable operations. Our business
involves highly complex manufacturing processes which are subject to disruption.
Process disruptions have occurred, resulting in delays in product shipments.
Process disruptions were due to:
o machine breakdowns;
o lack of adequate interior atmospheric control of temperature and
humidity;
o electric utility power failures;
o problems of breaking in an expanded workforce;
o contamination principally generated during installation of equipment
and development of processes; and
o defective incoming copper foil.
We cannot assure you that disruptions will not occur in the future. The loss of
revenue and earnings from such a disruption could have a materially adverse
effect on our results of operations.
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We Rely on a Limited Number of Customers and Loss of Significant Customers Could
Negatively Impact Our Business
Due to current productive capacity, we have been focusing our marketing
efforts on a growing number of select accounts. During 1998, Teradyne, Inc. and
HADCO Corporation accounted for 48% and 37%, respectively, of sales. Our
business and finances will be negatively affected if we lost both of these
customers.
Technological Changes in the Printed Circuit Board Industry Could Reduce Demand
for Our Product
Our laminates are used in the electronic printed circuit board industry
which could encounter competition from new technologies in the future and reduce
the number of circuit boards required in electronic equipment or render existing
interconnect technology less competitive or obsolete.
Shortages or Poor Quality of Raw Materials or Price Increases Could Negatively
Impact Our Business
Compositech purchases raw materials used to produce laminates and in
certain circumstances we bear the risk of price fluctuations. In addition,
shortages of and defects in certain types of materials have occurred in the past
and may occur in the future. During 1997, we experienced defects in incoming
copper foil used to make laminates. We have obtained an alternate source of
supply and also have explored solutions with the previous supplier. Future
shortages, defects or price fluctuations in raw materials could have a material
negative effect on our business, financial condition and results of operations.
Advanced Glassfiber Yarns LLC (successor company to Owens Corning), a major
fiberglass manufacturer, has developed and continues to develop products to meet
our processing and product requirements. Should this manufacturer not continue
supplying our quality and quantity needs, we would have to secure another
supplier. Such event could:
o have a material adverse effect on our ability to supply customers;
o reduce expected sales; and
o increase the costs of manufacturing our product.
We cannot assure you that an alternative supplier could meet our quality
and quantity needs on satisfactory terms.
Our Patents and Intellectual Property May Be Challenged, Invalidated or
Circumvented Which Would Negatively Impact Our Competitive Position
Compositech believes that its patent estate and its know-how are important
for the protection of its technology. We cannot assure you that any patents
issued to us will not be challenged, invalidated or circumvented or that such
patents will provide substantial protection with respect to our product, process
or competitive position. In addition, certain proprietary information which is
considered to be of substantial value is not covered by patents and, along with
our other intellectual property, is subject to misappropriation or obsolescence.
In addition, we granted certain immunities on our product patents to AMP
and Akzo Electronics Products NV which are potential competitors of
Compositech,. We granted HT Troplast AG ("HT"), a significant stockholder of
Compositech, the exclusive
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right under a license, to produce and market our laminates in Europe, the
countries of the former Soviet Union and Turkey. Although HT exited the laminate
business, the license remains in effect. Pursuant to the agreement, we are
obligated to sell only through HT in such territories.
We Are Subject to Environmental Regulations Which Could Negatively Impact Our
Business
We use copper and chemicals in our manufacturing process and limited
amounts of solvents for the sole purpose of cleaning its equipment. Although we
believe that our facility complies in all material respects with existing
environmental laws and regulations, we can not assure you that violations will
not occur. In the event of any future violations of environmental law and
regulations, we could be held liable for damages and for the cost of remedial
actions. In addition, environmental laws could become more stringent over time,
imposing greater compliance costs and increasing the risks and penalties
associated with a violation.
Certain Significant Stockholders Could Control the Management and Policies of
Compositech Which Could Prevent a Change of Control and May Adversely Affect the
Rights of Other Stockholders
As of May 24, 1999, officers, directors and certain other significant
stockholders of Compositech owned approximately 42.9% of Compositech's common
stock and voting preferred stock, including stock options and warrants
exercisable within 60 days. It is expected that these stockholders will continue
to control the management and policies of Compositech, including the power to
elect and remove a majority of directors of Compositech and the power to approve
any action requiring common stockholder approval.
In addition, some of these officers, directors and other stockholders, in
connection with certain outstanding loans, have a security interest in
Compositech's manufacturing equipment and either all of Compositech's patents
and patent applications or in Compositech's U.S. patents and patent
applications.
We Cannot Guarantee That Our Securities Will Continue to Meet the Listing and
Maintenance Criteria for The Nasdaq SmallCap Market(SM); If Not Listed You May
Find it More Difficult to Sell Your Shares
The common stock is quoted on The Nasdaq SmallCap Market(SM). We can give
no assurance that we will continue to meet the maintenance criteria for
continued listing of the common stock on The Nasdaq SmallCap Market(SM). The
minimum listing requirements for The Nasdaq SmallCap Market(SM) include, among
other criteria:
o net tangible assets of at least $2.0 million, or market capitalization
of $35 million, or net income of $500,000 (in the latest fiscal year
or two of the last three fiscal years);
o a minimum bid price per share of $1.00;
o a market value of the public float of $1.0 million;
o 300 round lot shareholders; and
o two market makers.
Furthermore, The Nasdaq SmallCap Market(SM) listing and maintenance
criteria may become more stringent over time and thus more difficult for us to
meet. Failure to meet the maintenance criteria may result in the discontinuance
of the inclusion of the common stock
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in The Nasdaq SmallCap Market(SM). In such event, trading, if any, in the common
stock may continue to be conducted in non-Nasdaq over-the-counter markets and
investors may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, the common stock. The common stock would then be
subject to the risk that it could become characterized as low-priced or "penny
stock," which characterization could severely affect the ability of stockholders
to sell their common stock.
The SEC has adopted regulations which generally define "penny stock" to be
any equity security that has a market price less than $5.00 per share (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account.
In addition, the penny stock rules generally require that prior to a
transaction in a penny stock the broker-dealer 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. 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 common stock becomes subject to the penny stock rules,
investors may find it more difficult to sell their common stock.
Certain Restrictive Charter and Bylaw Provisions May Have the Effect of
Deterring Takeovers and Affect The Price of Your Shares
Compositech's Certificate of Incorporation and Bylaws allow the Board of
Directors, without approval of the stockholders, to issue shares of preferred
stock and to fix the rights and preferences of the preferred stock. The Board of
Directors can also prohibit stockholders of Compositech from calling a special
meeting unless requested by at least a majority of the outstanding voting
shares. The certificate does not provide for cumulative voting for election of
directors.
In addition, our Bylaws provide that while the removal of a director or the
entire board of directors, with or without cause, may be accomplished by the
holders of the majority of shares entitled to vote, any director designated by
HT, may only so be removed for cause. These provisions could have the effect of
deterring unsolicited takeovers or other business combinations or delaying or
preventing changes in control or management of Compositech. This may prevent
transactions in which stockholders might otherwise receive a premium for the
securities over then-current market prices. In addition, these provisions may
limit the ability of stockholders to approve transactions that they may deem to
be in their best interests.
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Additional Shares will be Eligible for Public Sale in the Future; The Sale of a
Large Number of Shares Could Cause Our Stock Price to Go Down
Immediately following this Offering, there would be an aggregate of
17,063,112 shares of common stock outstanding, if the amount of shares being
registered pursuant to this prospectus are issued. In addition, an aggregate of
8,376,679 shares of common stock are issuable pursuant to outstanding options,
warrants and stock purchase and stock exchange agreements, including:
o 238,827 shares issuable upon the conversion of Series A Convertible
Preferred Stock; and
o 147,913 shares issuable, including accrued dividends, upon the
conversion of 7% Series B Preferred Stock.
Subject to restrictions on transfer referred to below, shares of common
stock issued by Compositech in private transactions, are treated as "restricted
securities" as defined under the Securities Act and in the future may be sold in
compliance with Rule 144 under the Securities Act or pursuant to a registration
statement filed under the Securities Act. As of May 24, 1999, (including shares
which may be acquired upon conversion of Series A Convertible Preferred Stock)
5,093,886 shares are eligible for sale under Rule 144.
Rule 144 generally provides that a person holding restricted securities for
a period of one year may sell every three months in brokerage transactions or
market-maker transactions an amount equal to the greater of:
o one percent (1%) of Compositech's issued and outstanding common stock;
or
o the average weekly trading volume of the common stock during the four
calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who is not an affiliate of
Compositech and who has satisfied a two-year holding period. In addition,
789,453 shares (including shares which may be acquired upon exercise of
outstanding warrants), are entitled in certain cases, subject to certain
restrictions, to include their shares in any registration of securities by
Compositech. The sale of substantial numbers of such shares, whether pursuant to
Rule 144 or pursuant to a registration statement, may have a depressive effect
on the market price of the common stock.
Forward-Looking Information Could be Wrong
This prospectus contains forward-looking statements that involve risks and
uncertainties. These statements deal with our future plans and growth
strategies, as well as trends we anticipate in our industry. We base these
forward-looking statements largely on our expectations, which are subject to
risks and uncertainties often beyond our control. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of many factors, including those described in this section and
elsewhere in this prospectus. In light of these risks and uncertainties, there
can be no assurance that the forward-looking information contained in this
prospectus will in fact occur or prove to be accurate.
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<PAGE>
THE OFFERING
Securities Offered................2,968,719 shares of common stock, par value
$0.01 per share, offered by the selling
stockholders. (1)
Common stock Outstanding
prior to the Offering.......15,648,694 shares as of May 24, 1999. (2)
Plan of Distribution..............The common stock offered by this prospectus
may be sold from time to time in one or more
transactions at market prices prevailing at
the time of the sale, at prices related to
such prevailing market prices or at negotiated
prices.
Use of Proceeds...................Compositech will not receive any of the
proceeds from the sale of the shares of common
stock offered by this prospectus. The
proceeds, if any, from the exercise of
warrants will be used for working capital and
general corporate purposes.
Symbol for common stock...........CTEK
- ----------
(1) Includes 1,335,062 shares of common stock underlying the warrants.
(2) Does not include 8,258,809 shares issuable upon exercise of outstanding
options, warrants and a stock purchase agreement at a weighted exercise
price of $4.13 per share, the outstanding shares of Series A convertible
preferred stock, which are convertible into 238,827 shares of common stock
at the option of the stockholder and the outstanding shares of the 7%
Series B convertible preferred stock, which are currently convertible into
approximately 147,913 shares of common stock at the option of the
stockholders. Also does not include 1,066,192 shares which may be issuable
under the terms of a Stock Exchange Agreement between Compositech and the
other investors in the Montreal joint venture.
USE OF PROCEEDS
The Company will not receive any proceeds resulting from the sale of the
shares of common stock by the selling stockholders. See "Selling Stockholders."
The warrants have exercise prices ranging from $1.125 per share to $3.00
per share. The warrants have to be exercised to purchase shares of common stock
prior to the resale of the common stock offered by the selling stockholder
pursuant to this offering. The exercise of all the warrants would result in
total gross proceeds to Compositech of $2,073,487. In the event that any of the
warrants are exercised in the future, net cash proceeds to Compositech would be
used for working capital or general corporate purposes. We cannot predict
whether, how and to what extent any warrants will be exercised.
13
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information concerning the selling
stockholders for whom we are registering the resale of shares of our common
stock. The number of shares of common stock shown as securities owned prior to
the offering and as shares to be offered includes the number of shares to be
registered according to the agreements with the holders of the common stock and
warrants. The footnotes to the selling stockholder table below indicate those
selling stockholders which disclosed to us their holdings of our common stock
and their ultimate control persons pursuant to filings under the Exchange Act.
The beneficial ownership of the shares of common stock was determined in
accordance with Rule 13d-3 under the Exchange Act to reflect the ownership of
shares issuable upon exercise of outstanding options, warrants or other common
stock equivalents which are exercisable within 60 days of the date of this
prospectus. As provided in the rule, shares issuable to any holder are deemed
outstanding for the purpose of calculating the holder's beneficial ownership but
not any other holder's beneficial ownership.
The shares of common stock listed under the heading Securities Owned Prior
to the Offering - Common Stock may include shares of common stock and common
stock equivalents exercisable within 60 days of the date of this prospectus
owned by selling stockholders that are not being offered for sale by this
prospectus.
<TABLE>
<CAPTION>
Securities Owned Prior to Shares to Shares Owned after
the Offering be Offered the Offering (2)
------------------------------- ---------- ------------------
Common
Name of selling stockholder Stock Warrants(1) Shares %
- --------------------------- ------- ----------- ------ ----
<S> <C> <C> <C> <C> <C>
Alan R. Bartelheimer 115,300 12,500 62,500 65,300 *
Louis Berrick 36,000 6,250 31,250 11,000 *
Nils Bjork Living Trust 100,000 20,000 100,000 20,000 *
Boca Investments 0 300,000 300,000 0
Richard Boivin 10,000 2,500 12,500 0
Anna Rose Borgia 17,500 1,500 7,500 11,500 *
Harry J. Briscoe 50,264 4,891 24,455 30,700 *
William C. Buchanan 46,600 11,025 55,125 2,500 *
Olga L. Cadaval 10,000 2,500 12,500 0
Luiz Cadaval 10,000 2,500 12,500 0
Charles A. Carriker 11,000 2,750 13,750 0
Dr. Kunjaraman Chandramohan 25,000 6,250 31,250 0
Phillip R. Clark 57,905 12,351 61,756 8,500 *
Timothy Cronin 34,722 7,555 37,777 4,500 *
Jeffrey J. Davis, MD 45,000 6,250 31,250 20,000 *
Helga Gabriel 0 12,000 12,000 0
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Securities Owned Prior to Shares to Shares Owned after
the Offering be Offered the Offering (2)
------------------------------- ---------- ------------------
Common
Name of selling stockholder Stock Warrants(1) Shares %
- --------------------------- ------- ----------- ------ ----
<S> <C> <C> <C> <C> <C>
Oscar Garza 59,972 5,556 27,778 37,750 *
Haskin & Associates, Inc. 39,678 0 39,678 0
Investor Resource Services, Inc. 655,556 0 655,556 0
Kazah Securities Ltd. 111,111 0 111,111 0 *
Eugene Kuhar 11,000 2,500 12,500 1,000 *
Charles & Sandra Loomis 10,500 2,500 12,500 500 *
Elmer Macke 45,750(3) 2,500 12,500 35,750 *
Harry C. & Phyllis F. Marcus 27,200 6,500 32,500 1,200 *
Jeffrey Mulgheir 8,900 2,225 11,125 0
Kornelius Munte 8,000 18,000 18,000 8,000 *
Thomas C. & Nancy E. Parker 21,200(4) 5,000 25,000 1,200 *
Arthur Rother 15,000 3,750 18,750 0
SBSI Corporation Pension Fund 15,600 3,900 19,500 0
Albert Schimel 26,400 4,688 23,438 7,650 *
Renate Siepe 0 6,000 6,000 0
Robert Franklin Smith 115,000 5,000 25,000 95,000 *
ROC Management LLC 97,849 69,717 167,566 0
Michael Sovelenko Trust 38,500 1,250 6,250 33,500 *
Sovereign Capital Advisors, LLC 0 3,670(5) 3,670 0
Roy E. Stephens, Jr. 44,272 11,006 55,028 250 *
Howard James Stryker 55,900 13,750 68,750 900 *
Bart Verdirame 5,000 1,250 6,250 0
Robert L. Weber 60,700(6) 2,250 11,250 51,700 *
Trautman Wasserman & Company, Inc. 463,573(7) 226,104(8) 265,782 423,895 2.4
Gregory O. Trautman 44,852(9) 271,991(9) 271,991 44,852 *
Mark Barbera 22,426(10) 118,782(10) 118,782 22,426 *
Mark Gillis 0 105,451(11) 105,451 0
Robert J. Kramer 44,852(12) 30,900(12) 30,900 44,852 *
--------- --------- --------- --------- ----
Totals 2,618,082 1,335,062 2,968,719 984,425 5.5
--------- ---------- ---------- --------- ----
</TABLE>
(*) Assuming the sale of all shares of common stock being offered for sale by
this prospectus, represents less than 1% of the outstanding common stock.
15
<PAGE>
(1) Represents shares of common stock underlying warrants that are being
registered pursuant to this prospectus and offered for sale by the selling
stockholders.
(2) Represents shares of common stock and common stock equivalents owned after
the offering assuming no further sales other than those made pursuant to
this prospectus.
(3) Includes 12,250 shares of common stock held by a self directed retirement
plan owned by Mr. Macke.
(4) Includes 1,200 shares of common stock held by a self directed retirement
plan owned by Mrs. Parker.
(5) Includes 1,843 shares of common stock underlying warrants, exercisable at
$2.035, and 1,827 shares of common stock underlying warrants, exercisable
at $2.053, issued pursuant to a private placement of Compositech's common
stock, which had its final closing on March 26, 1999.
(6) Includes 50,000 shares of common stock held by a self directed retirement
plan owned by Mr. Weber.
(7) Formerly known as Trautman Kramer & Company, Inc. The securities consist
of:
o 36,600 shares of common stock and 11,545 shares underlying Redeemable
Common Stock Warrants, as of the close of business on May 21, 1999,
held in the trading account of Trautman Wasserman & Company, Inc., a
market maker of Compositech's common stock and redeemable warrants
(this total may fluctuate on a daily basis depending on trading
activity);
o 125,000 shares of common stock, held in their investment account;
o 39,678 shares issued as compensation in connection with the closing of
a loan financing, which had its final closing in January 1999;
o 40,750 shares underlying warrants exercisable at $6.00 per share
issued as partial compensation for Compositech's private placement of
its 5% Convertible Debentures which had its final closing on August
26, 1997; and
o 210,000 shares underlying 105,000 of Compositech's Unit Purchase
Options, enabling the holder to purchase units, at $7.50 per unit,
consisting of a share of Compositech's common stock and a redeemable
warrant to purchase a share of Compositech's common stock for $7.8125
per share.
(8) The securities consist of:
o 100,000 shares of common stock underlying warrants, exercisable at
$1.25, issued as a commission in connection with the agreement with
Boca Investments to provide consulting services;
o 66,546 shares of common stock underlying warrants, exercisable at
$1.125 issued as partial compensation pursuant to a private placement
of Compositech's common stock, which had its final closing on March
26, 1999, and
o 59,558 shares of common stock underlying warrants, exercisable at
$2.125, issued as partial compensation pursuant to a private placement
of Compositech's common stock, which had its final closing on March
26, 1999.
(9) Mr. Trautman is a principal of the firm of Trautman Wasserman & Company,
Inc. He disclaims beneficial ownership of shares attributable to Trautman
Wasserman & Company, Inc.. The securities listed under common stock consist
of 44,852 shares underlying common stock purchase warrants exercisable at
$6.00 per share issued as partial compensation for Compositech's private
placement of its 5% Convertible Debentures which had its final closing on
August 26, 1997. The securities listed under warrants consist of :
o 29,400 shares of common stock underlying warrants, exercisable at
$2.6125, issued as partial compensation pursuant to Compositech's
final conversion of its 5% Convertible Debentures, which occurred in
April 1998;
o 187,989 shares of common stock underlying warrants, exercisable at
$1.125 issued as partial compensation pursuant to a private placement
of Compositech's common stock, which had its final closing on March
26, 1999, and
o 54,602 shares of common stock underlying warrants, exercisable at
$2.125, issued as partial compensation pursuant to a private placement
of Compositech's common stock, which had its final closing on March
26, 1999.
16
<PAGE>
(10) Mr. Barbera is an employee of the firm of Trautman Wasserman & Company,
Inc. The securities listed under common stock consist of 22,426 shares
underlying common stock purchase warrants exercisable at $6.00 per share
issued as partial compensation for Compositech's private placement of its
5% Convertible Debentures which had its final closing on August 26, 1997.
The securities listed under warrants consist of:
o 14,700 shares of common stock underlying warrants, exercisable at
$2.6125, issued as partial compensation pursuant to the Registrant's
final conversion of its 5% Convertible Debentures, which occurred in
April 1998;
o 80,567 shares of common stock underlying warrants, exercisable at
$1.125 issued as partial compensation pursuant to a private placement
of Compositech's common stock, which had its final closing on March
26, 1999, and
o 23,515 shares of common stock underlying warrants, exercisable at
$2.125, issued as partial compensation pursuant to a private placement
of Compositech's common stock, which had its final closing on March
26, 1999.
(11) Mr. Gillis is an employee of the firm of Trautman Wasserman & Company, Inc.
The securities listed under warrants consist of 58,516 shares of common
stock underlying warrants, exercisable at $1.125, and 46,935 shares of
common stock underlying warrants, exercisable at $2.125, issued as partial
compensation pursuant to a private placement of Compositech's common stock,
which had its final closing on March 26, 1999.
(12) Mr. Kramer is a former principal of the firm of Trautman & Company, Inc.
The securities listed under common stock consist of 44,852 shares
underlying common stock purchase warrants exercisable at $6.00 per share
issued as partial compensation for Compositech's private placement of its
5% Convertible Debentures which had its final closing on August 26, 1997.
The securities listed under warrants consist of 30,900 shares of common
stock underlying common stock purchase warrants, exercisable at $2.6125,
issued as partial compensation pursuant to Compositech's final conversion
of its 5% Convertible Debentures, which occurred in April 1998.
- -----------
The shares of common stock are being registered under the Securities Act
pursuant to the terms of certain registration rights agreements between the
selling stockholders and Compositech entered into at the time the selling
stockholders acquired the common stock and the warrants. Each selling
stockholder will be entitled to receive all of the proceeds from the future sale
of his, her or its shares of common stock. Except for the costs of including
such shares of common stock within the registration statement of which this
prospectus forms a part, which costs are borne by Compositech, the selling
stockholders will bear all expenses of any offering by them of their shares of
common stock, including the costs of their counsel and any sales commissions
incurred.
17
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders or their transferees may, from time to time, sell
all or a portion of the shares of common stock being registered pursuant to this
prospectus in privately negotiated transactions or otherwise, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to such market prices or at negotiated prices. The shares may be sold by
the selling stockholders by one or more of the following methods, without
limitation:
o block trades in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o privately negotiated transactions;
o short sales;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
From time to time, the selling stockholders may engage in short sales,
short sales against the box, puts and calls and other transactions in our
securities or derivatives of such securities, and may sell and deliver the
shares in connection therewith or in settlement of securities loans. From time
to time, the selling stockholders may pledge their shares pursuant to the margin
provisions of its customer agreements with its brokers. Upon a default by the
selling stockholders, the broker may offer and sell the pledged shares from time
to time.
In effecting sales, brokers and dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate in such sales. Brokers
or dealers may receive commissions or discounts from the selling stockholders
(or, if any such broker-dealer acts as agent for the purchaser of such shares,
from such purchaser) in amounts to be negotiated which are not expected to
exceed those customary in the types of transactions involved. Broker-dealers may
agree with the selling stockholders to sell a specified number of such shares at
a stipulated price per share, and, to the extent such broker-dealer is unable to
do so acting as agent for a selling stockholder, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the selling stockholders.
Broker-dealers who acquire shares as principal may thereafter resell such
shares from time to time in transactions (which may involve block transactions
and sales to and through other broker-dealers, including transactions of the
nature described above) in the over-the-counter market or otherwise at prices
and on terms then prevailing at the time of sale, at prices then related to the
then-current market price or in negotiated transactions and, in connection with
such resales, may pay to or receive from the purchasers of such shares
commissions as described above. The selling stockholders may also sell the
shares in accordance with Rule 144 under the Securities Act, rather than
pursuant to this prospectus.
The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in sales of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In such event, any
18
<PAGE>
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We have agreed to indemnify the selling stockholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act.
We have informed the selling stockholders that the anti-manipulation
provisions of Regulation M under the Exchange Act may apply to the sales of
their shares offered hereby. We have also advised the selling stockholders of
the requirement for delivery of this prospectus in connection with any sale of
the shares offered hereby.
Certain selling stockholders may from time to time purchase shares of
common stock in the open market. These selling stockholders have been notified
that they should not commence any distribution of shares unless they have
terminated their purchasing and bidding for common stock in the open market as
provided in applicable securities regulations.
There is no assurance that the selling stockholders or their transferees
will sell any or all of the shares offered by them in this prospectus.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
terminology such as "may", "will", "expect", "believe", "intend", "anticipate",
"estimate", "continue" or similar words. These statements discuss future
condition or state other "forward-looking" information. When considering such
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this prospectus and the documents that we incorporate
by reference.
WHERE YOU CAN FIND MORE INFORMATION ABOUT COMPOSITECH
We file reports, proxy statements and other information with the Securities
and Exchange Commission. You can read and copy any document we file at the
Public Reference Room maintained by the SEC at Room 1024, 450 Fifth Street,
N.W., Washington, D.C., 20549, and at the SEC's Regional Offices at the 13th
Floor, World Trade Center, New York, New York, 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois, 60661. Please call 1-800-SEC-0330 for
further information concerning the Public Reference Room. Our filings also are
available to the public from the SEC's website at www.sec.gov.
We distribute to our stockholders annual reports containing audited
financial statements. Documents filed by us can also be inspected at the offices
of The Nasdaq SmallCap Market, 1735 K Street, NW, Washington, DC 20006-1500.
19
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it. This means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be part of this prospectus. Information we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the offering is completed :
(1) Compositech's Annual Report on Form 10-KSB for the year ended December
31, 1998;
(2) Compositech's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1999
(3) The description of our common stock contained in our Registration
Statement on Form 8-A (File No. 0-20701), declared effective on July
2, 1996, by which our shares of common stock were registered under
Section 12 of the Exchange Act and any other amendments or reports
filed for the purpose of updating such description.
You may request a copy of these filings, at not cost, by writing or calling
us at:
Compositech Ltd.
120 Ricefield Lane
Hauppauge, NY 11788
Attention: Investor Relations
Telephone: (516) 436-5200, Extension 114
This prospectus is part of a registration statement we filed with the SEC. You
should rely only on the information or representations provided in this
prospectus. We have not authorized anyone to provide you with different
information. The common stock will not be offered in any state where an offer is
not permitted. Do not assume that the information in this prospectus is accurate
as of any date other than the date on the cover of this prospectus.
LEGAL OPINIONS
The validity of the shares of common stock offered hereby will be passed
upon for Compositech and selling stockholders by Patterson, Belknap, Webb &
Tyler LLP, 1133 Avenue of the Americas, New York, New York, 10036-6710.
EXPERTS
The financial statements of Compositech Ltd. appearing in Compositech's
Annual Report (Form 10-KSB) for the year ended December 31, 1998, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon (which contains an explanatory paragraph describing conditions that
raise substantial doubt about Compositech's ability to continue as a going
concern as described in Note 1 to the financial statements) included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
20
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representation not contained in this prospectus, and, if given or
made, such information or representation must not be relied upon as having been
authorized by Compositech or the selling stockholders. This prospectus does not
constitute an offer to buy any of these securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
CONTENTS
Page
----
Information about Compositech ............................................. 4
Risk Factors .............................................................. 6
The Offering .............................................................. 13
Use of Proceeds ........................................................... 13
Selling Stockholders ...................................................... 14
Plan of Distribution ...................................................... 18
Forward-Looking Statements ................................................ 19
Where You Can Find More
Information about Compositech ............................................. 19
Information Incorporated by Reference ..................................... 20
Legal Opinions ............................................................ 20
Experts ................................................................... 20
2,968,719 Shares of
Common Stock
COMPOSITECH LTD.
----------------------------
PROSPECTUS
----------------------------
May ___, 1999
21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various estimated amount of fees and
expenses payable in connection with this offering other than sales commissions.
All such expenses will be borne by the Registrant.
Item Amount of Expenses
---- ------------------
Commission Registration Fees $ 1,762
Printing Expenses 4,000
Accounting Fees and Expenses 4,000
Legal Fees and Expenses 20,000
Miscellaneous 2,000
-------
Total $31,762
=======
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware and
Article Eighth of Compositech's Amended and Restated Certificate of
Incorporation contain provisions for indemnification of officers, directors,
employees and agents of Compositech. The Amended and Restated Certificate of
Incorporation requires Compositech to indemnify such persons to the full extent
permitted by Delaware Law. Each person will be indemnified in any proceeding if
he acted in good faith and in a manner which he reasonably believed to be in ,
or not opposed to, the best interest of Compositech. Indemnification would cover
expenses, including attorney's fees, judgments, fines and amounts paid in
settlement.
Compositech has directors' and officers' liability insurance. Such
insurance may cover liabilities asserted against any present or past director or
officer incurred in the capacity of director or officer arising out of such
status, whether or not Compositech would have the power to indemnify such
person.
<PAGE>
Item 16. Exhibits.
4.1.1* Form of Common Stock Purchase Warrant issued (i) to certain investors in
connection with a private placement of Compositech's common stock, which
had its final closing on March 26, 1999 and (ii) in exchange for
consulting services.
4.1.2* Form of Common Stock Purchase Warrant issued (i) in connection with the
final closing of Compositech's Debentures and (ii) in connection with
Compositech's 1995 private placement.
5.1* Opinion of Patterson, Belknap, Webb & Tyler LLP, special counsel for the
Registrant, as to the legality of the securities being offered.
10.1* Form of Investor Subscription Agreement between Compositech and certain
investors in connection with a private placement of Compositech's common
stock which had its final closing on March 26, 1999.
23.1(1) Consent of Ernst & Young LLP
23.2* Consent of Patterson, Belknap, Webb & Tyler LLP (contained in Exhibit
5.1)
24* Power of Attorney (see signature pages of Registration Statement)
- -------------
* Previously filed
(1) Filed herewith
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration Statement:
(i) to include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(ii) to 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, represents 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 this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply to this
Registration Statement if the information required to be included in a
post-effective amendment by those paragraphs is contained
II-2
<PAGE>
in periodic reports filed by the Registrant pursuant to Section 13 or Section 15
(d) of the Securities Exchange Act and incorporated by reference in this
Registration Statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13 (a) or Section 15 (d) of the
Exchange Act that is incorporated by reference in this registration statement
shall be deemed to be a new Registration Statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in the first paragraph of Item
15 above, 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 said Securities Act and is, therefore, unenforceable. In
the event that as claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Hamlet of Hauppauge, State of New York, on May 27, 1999.
COMPOSITECH LTD.
Date: May 27, 1999 By: /S/ Christopher F. Johnson
-----------------------------------
Christopher F. Johnson
Chief Executive Officer and President
(Principal Executive Officer)
In accordance with the Securities Act, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
* May 27, 1999
- ------------------------------------------
Jonas Medney
Chairman of the Board and Director
* May 27, 1999
- ------------------------------------------
Fred E. Klimpl, Vice Chairman and Director
/S/ Christopher F. Johnson May 27, 1999
- ------------------------------------------
Christopher F. Johnson
President, Chief Executive Officer and Director
(Principal Executive Officer)
/S/ Samuel S. Gross May 27, 1999
- ------------------------------------------
Samuel S. Gross
Executive Vice President, Secretary, Treasurer and Director
(Principal Financial and Accounting Officer)
* May 27, 1999
- ------------------------------------------
Willard T. Jackson, Director
* May 27, 1999
- ------------------------------------------
Pierre Laflamme, Director
* May 27, 1999
- ------------------------------------------
Robert W. Middleton, Director
II-4
<PAGE>
* May 27, 1999
- ------------------------------------------
Heinz-Gerd Reinkemeyer, Director
* May 27, 1999
- ------------------------------------------
James W. Taylor, Director
*By: /s/ Christopher F. Johnson
- ------------------------------------------
Christopher F. Johnson
Attorney-in-fact pursuant to power
of attorney granted in Registration
Statement (No. 333-75401)
as filed on April 1, 1999
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<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
4.1.1* Form of Common Stock Purchase Warrant issued (i) to certain investors in
connection with a private placement of Compositech's common stock, which
had its final closing on March 26, 1999 and (ii) in exchange for
consulting services.
4.1.2* Form of Common Stock Purchase Warrant issued (i) in connection with the
final closing of Compositech's Debentures and (ii) in connection with
Compositech's 1995 private placement.
5.1* Opinion of Patterson, Belknap, Webb & Tyler LLP, special counsel for the
Registrant, as to the legality of the securities being offered.
10.1* Form of Investor Subscription Agreement between Compositech and certain
investors in connection with a private placement of Compositech's common
stock which had its final closing on March 26, 1999.
23.1(1) Consent of Ernst & Young LLP
23.2* Consent of Patterson, Belknap, Webb & Tyler LLP (contained in Exhibit
5.1)
24* Power of Attorney (see signature pages of Registration Statement)
- -------------
* Previously filed
(1) Filed herewith
II-6
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-75401) and related
prospectus of Compositech Ltd. for the registration of 2,968,719 shares of its
common stock and to the incorporation by reference therein of our report dated
February 12, 1999, except for Note 15 as to which the date is March 26, 1999,
with respect to the financial statements of Compositech Ltd. included in its
Annual Report (Form 10-KSB) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Melville, New York
May 27, 1999
