<PAGE> 1
5,434,813 SHARES
OF
WRP CORPORATION
(formerly known as MBf USA, Inc.)
COMMON STOCK
($0.01 PAR VALUE)
This Prospectus relates to the public offering of up to 5,434,813 shares
of Common Stock, $.01 par value (the "Shares" or the "Common Stock"), of WRP
Corporation, formerly known as MBf USA, Inc. (the "Company") of which 1,252,538
shares consist of either Class A Common Stock or the Common Stock into which the
Class A Common Stock is convertible, on a one share for one share basis. All of
the Shares offered hereby may be sold from time to time by MBf International
Ltd. ("MBFI") and Wembley Rubber Products (M) Sdn. Bhd. ("Wembley," and together
with MBFI, the "Selling Shareholders").
The Shares trade on the Nasdaq SmallCap Market under the symbol "WRPC."
On December 18, 1998, the last reported bid price was $5.50 for the Shares.
MBFI and the Company entered into agreements with Wembley which provide
that (i) MBFI would sell all of the Company's authorized, issued and
outstanding Series A Common Stock (1,252,538 shares) to Wembley and (ii) the
Company would sell 2,500,000 unregistered shares of Common Stock to Wembley. On
March 31, 1998, Wembley purchased all of the Common Stock and Class A Common
Stock which were subject to these agreements. Neither MBFI nor Wembley will own
any interest in the Company upon the sale of the Shares registered herein. See
"Selling Shareholders" and "Risk Factors."
The Selling Shareholders and any broker-dealers through whom such
Shares are sold may be deemed "underwriters," as that term is defined in the
Securities Act of 1933, as amended (the "Securities Act"). The Shares to be
offered by the Selling Shareholders may be offered in one or more transactions
on the Nasdaq/SmallCap Market or in negotiated transactions or a combination of
such methods of sale, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.
Brokers or dealers may receive commissions or discounts from the
Selling Shareholders in amounts to be negotiated immediately prior to the sale.
The Company will pay substantially all other expenses of this offering
(including the expense of preparing and duplicating this Prospectus and the
Registration Statement of which it is a part). The Company will not receive
any proceeds from the sale of any of the Shares by the Selling Shareholders.
SEE "RISK FACTORS" ON PAGE 6 FOR INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December 22, 1998
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference. The Company's file number with
the Commission for all reports filed under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), is 0-17458:
1. The Company's Annual Report on Form 10-K, for fiscal year ended
December 31, 1997 (filed on March 31, 1998 and amended on
November 12, 1998 and December 14, 1998).(1)
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 (filed on May 15, 1998), June 30, 1998
(filed on August 14, 1998), and September 30,1998 (filed on
November 16, 1998 and amended on December 14, 1998).
3. The Company's Current Reports on Form 8-K dated January 2, 1998
(filed January 14, 1998), March 9, 1998 (filed March 9, 1998),
March 31, 1998 (filed April 10, 1998), and March 31, 1998
(filed May 5, 1998).
4. All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934
prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference in this Prospectus.
5. The Company's Form 8-A dated February 2, 1989.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which is also deemed to be incorporated
by reference herein modifies or supersedes such statements. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS
THERETO) ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY
PERSON TO WHOM THIS PROSPECTUS HAS BEEN DELIVERED, FROM THE COMPANY. REQUESTS
TO OBTAIN SUCH DOCUMENTS SHOULD BE DIRECTED TO THE COMPANY, 500 PARK BLVD.,
SUITE 1260, ITASCA, ILLINOIS, 60143, ATTN.: MR. ROBERT CARTER (TELEPHONE:
(630) 285-9191).
(1) PT WRP Buana Multicorpora ("PT Buana") is a 70% owned subsidiary of
the Company. The accounting firm of KPMG Hanadi Sudjendro & Rekan ("HS&R")
audited PT Buana's financial statements for the year ended December 31, 1995,
which financial statements are included in the Company's audited financial
statements for that year end. The Company has been informed that HS&R was
dissolved and liquidated during 1998 and has discontinued providing audit and
accounting services. As a result, both persons purchasing Shares in the
Offering and the Company may find it extremely difficult, if not impossible, to
seek legal recourse against HS&R for material misstatements or omissions, if
any, in the Company's registration statement, of which the Prospectus is a part,
or this Prospectus. At present, no facts have come to the Company's attention
which would indicate any need to make a claim against HS&R. In addition,
purchasers of the Shares will be limited in their ability to allege liability of
HS&R under Section 11 of the Securities Act for false and misleading statements,
if any, relating to the financial statements prepared by HS&R. Furthermore,
since HS&R has not included an updated consent to the incorporation by reference
of their financial statements into this Prospectus, the so called "due
diligence" defense which otherwise might be available to the Company's directors
and officers may be substantially reduced or eliminated altogether.
2
<PAGE> 3
THE COMPANY
WRP Corporation (the "Company"), known as MBf USA, Inc. from May 21,
1993 until June 24, 1998 and American Drug Screens, Inc. ("ADS") until May 21,
1993, was organized February 24, 1988, under Oklahoma law as SHL, Inc. The
Company was reorganized upon the acquisition of ADS on June 28, 1988, whereby
ADS was merged with and into the Company, with the Company being the surviving
corporation and assuming control of the ownership and operation of ADS. The
name of the surviving corporation was changed to ADS on the effective date of
the merger.
On February 27, 1992, the Company acquired American Health Products
Corporation ("AHPC") from MBFI, which is a subsidiary of MBf Holdings Bhd.
("MBf Holdings"). AHPC markets medical examination gloves. In connection with
the acquisition of AHPC, the Company issued a class of securities to MBfI
giving control of the Company to MBfI. See "Risk Factors--Control of Board of
Directors."
In June 1995, the Company announced a restructuring plan which
included the resignation of its Chairman/CEO, President/COO, and CFO. Mr.
Edward J. Marteka was named President of the Company while retaining his
responsibilities as President of AHPC, which he co-founded. The Board of
Directors directed the Company to focus on its core businesses and to exit from
the nutritional products business which it had commenced during the third
quarter of 1994, for which sales were negligible and the entry costs were very
high, contributing to significant losses. Furthermore, the use of AHPC's cash
flow for starting the nutritional products business was limiting AHPC's ability
to purchase glove inventory.
Key components of the restructure charge were costs related to the
exit from the nutritional product business, executive management changes, and
the closing of the former executive office in New Jersey. The charge includes
provisions for personnel severance and work force reductions, relocation and
related costs, the write down of intangible and other assets and costs
associated with the execution of the restructure. The restructuring resulted
in a one-time charge of $1,808,757 in the second quarter of 1995, which was
paid.
On December 11, 1995 the Company's shareholders approved the
reincorporation of the Company as a Maryland corporation by merger of the
Company into a newly formed, wholly owned subsidiary of the Company. In
connection with the reincorporation, the Board of Directors approved and the
Company effected a 10 for 1 reverse stock split of its Series A Common Stock
and Common Stock. As a result, each shareholder was entitled to receive one
share of Series A Common Stock or Common Stock of the Company's successor
subsequent to the Merger for every 10 shares of Series A Common Stock or Common
Stock, respectively, then held by such shareholder.
During the second quarter of 1998, the Company's shareholders and Board
of Directors approved the change of the Company's name to WRP Corporation.
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LATEX GLOVE PRODUCTS
Through its subsidiary, AHPC, the Company markets non-sterile,
ambidextrous latex and vinyl examination gloves used primarily in the health
care industry. Gloves marketed by AHPC are manufactured by PIE Healthcare Sdn.
Bhd. ("PIE"), PT Buana, a 70% subsidiary of the Company, Wembley and other third
parties. Gloves are marketed by AHPC under the brand names "Glovetex(R)" and
"DermaSafe(R)" to medical/surgical distributors, dental distributors, nursing
homes and food service distributors. AHPC also sells gloves to other companies,
which market the gloves under their own brand names or "private labels."
In addition to the standard examination gloves, AHPC distributes other
product lines which include powdered gloves, powder-free gloves, vinyl
examination gloves and synthetic gloves. Expansion of the product line into
other latex-based products is planned, and AHPC has identified for possible
introduction in the future such products as industrial gloves and other products
related to infection-control.
AHPC purchases its powder-free latex gloves from Wembley. AHPC has
entered into a supply agreement with this company for its powder-free gloves
which will enable the Company to obtain the necessary inventory levels to meet
customer glove demands.
AHPC markets examination gloves through a network of national, regional
and local medical/surgical dealers that sell primarily to hospitals and nursing
homes. AHPC also markets to alternate care and home health care dealers,
dental dealers, food service distributors, and major retail outlets. The
principal methods of marketing are through sales representatives, trade shows
and seminars, as well as advertising and direct mail. AHPC employs a sales
force of approximately 25 persons comprised of manufacturer sales
representatives, regional sales managers and representatives and an in-house
sales and customer support staff.
The quality control procedures for the manufacture of examination
gloves marketed in the United States are regulated by the FDA. Included within
such procedures are minimum testing requirements, as well as FDA Good
Manufacturing Practices.
The market for latex examination gloves is highly competitive. With
the discovery of the Acquired Immune Deficiency Syndrome/HIV virus ("AIDS") in
the 1980's, and the perception of the latex glove as being a barrier to
infection from AIDS and other communicable diseases, several companies entered
the latex glove industry, many of which failed or were acquired by other
companies. Further consolidation of companies in the industry may be expected
to occur in the future. The primary means of competition are price, product
quality, service, and the size and reliability of the manufacturer.
LATEX CONDOM PRODUCTS
On December 30, 1993 the Company purchased the rights to the condom
license agreement dated December 31, 1992 between Playboy Enterprises, Inc.
("PEI") and MACC Trading Limited, an affiliate of MBf Holdings. In November
1996, the Company reached an amicable agreement with Playboy Enterprises, Inc.
to terminate the license agreement under which the Company distributed
Playboy(R) brand
4
<PAGE> 5
condoms in 15 countries. Under the negotiated agreement, the Company, until
June 30, 1997, continued to sell Playboy(R) condoms in the 15 countries
where it had launched the product. Subsequent to June 30, 1997, the Company
is entitled to receive royalty revenues on sales of Playboy(R) condoms, if
any, in these countries and Japan through June 30, 2000 and 1998, respectively.
5
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RISK FACTORS
This offering involves a high degree of risk. Prospective investors
in the Company should consider carefully the following risk factors with
respect to the Company and this offering.
Product Liability Insurance. Participants in the medical supplies
business are potentially subject to lawsuits alleging product liability, many
of which involve significant damage claims and defense costs. A successful
claim against the Company in excess of the Company's insurance coverage could
have a material adverse effect on the Company's results of operations or
financial condition. Claims made against the Company, regardless of their
merit, could also have a material adverse effect on the Company's reputation.
There is no assurance that the coverage limits of the Company's insurance
policy will be adequate or that present levels of coverage will be available at
affordable rates in the future. While the Company has been able to obtain
product liability insurance in the past, such insurance varies in cost, is
difficult to obtain and may not be available in the future on acceptable terms
or at all. The Company is subject to a number of lawsuits filed against it and
other manufacturers of latex gloves alleging injuries relating to allergic
reactions caused by the residual chemicals or latex proteins in gloves.
However, management believes all such matters are adequately provided for,
and if not provided for are without merit or involve such amounts that would
not materially adversely affect the Company's results of operations or
financial condition.
Dependence Upon Significant Customers. During 1997, two of the
Company's customers, Owens & Minor, Inc. and Sysco Co., accounted for
approximately 37% and 31% of net sales, respectively. The loss of either of
the Company's principal customers would have a material adverse effect on the
Company.
Control of Board of Directors. At present, Wembley, as the sole
holder of the Company's Series A Common Stock, has the right to elect seven
Class A Directors, which constitutes a majority of the Company's Board of
Directors. As a result, Wembley presently controls the Board. Such control of
the Company's Board of Directors may have certain anti-takeover effects since
there are significant impediments, both existing and contingent, for any
potential purchaser of a majority of the Company's Common Stock to gain control
of the Company. Because Wembley owns all of the Company's authorized Series A
Common Stock, the only presently available method for a potential purchaser to
obtain control of the Company would be to hold at least a majority of the
Series A Common Stock. Absent conversion of Series A Common Stock into Common
Stock, a potential purchaser would not be able to obtain control of the Company
by simply owning a majority of the Common Stock.
Absence of Dividends; Dividends Policy. The Company has not paid any
dividends upon its Common Stock since its formation. The Company does not
currently intend to pay any dividends upon its Shares in the foreseeable future
and anticipates that earnings, if any, will be used to finance the development
and expansion of its business. Any payment of future dividends and the amounts
thereof will be dependent upon the Company's earnings, financial requirements
and other factors deemed relevant by the Company's Board of Directors. The
Company cannot provide any assurance that its operations will result in
revenues sufficient to enable the distribution of dividends to shareholders.
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<PAGE> 7
Variations in Quarterly Results. The Company's quarterly operating
results are subject to various risks and uncertainties, including risks and
uncertainties related to: local economic conditions; competitive pressures; the
composition, timing and size of orders from and shipments to major customers;
variations in product mix and the size mix between sales; variations in product
cost; infrastructure costs; obsolescence of inventory; and other factors as
discussed below. Accordingly, the Company's operating results may vary
materially from quarter to quarter.
The Company operates with little backlog and, as a result, net product
sales in any quarter are substantially dependent on the orders booked and
shipped in that quarter. Because the Company's operating expenses are based on
anticipated revenue levels and because a high percentage of the Company's
expenses are relatively fixed, if anticipated shipments in any quarter do not
occur as expected, the Company's operating results may be adversely effected and
fall significantly short of expectations. Any other unanticipated decline in
the growth rate of the Company's net revenues, without a corresponding and
timely reduction in the growth of operating expenses, could also have an
adverse effect on the Company and its future operating results.
The Company aims to prudently control its operating expenses. However,
there is no assurance that, in the event of any revenue, gross margin or other
shortfall in a quarter, the Company will be able to control expenses
sufficiently to meet profitability objectives for the quarter.
Working Capital Deficit. The Company's balance sheet for the year
ended December 31, 1997 shows current assets of $16,173,033 and current
liabilities of $17,751,645, resulting in a working capital deficit of
$1,578,612. For the year ended December 31, 1996, the Company had a working
capital deficit of $1,705,267. Although the Company is aggressively working
toward eliminating this deficit, the Company is unable to guarantee that it
will be successful in its efforts.
Dependence on Gloves. The Company is exclusively engaged in the
manufacture and sale of disposable gloves. Accordingly, the Company's results
of operations and financial condition are highly dependent on the level of
supply of and demand for disposable gloves. There can be no assurance that the
supply of or demand for disposable gloves will continue at current levels or
that changes in such supply or such demand will not have a material adverse
effect on the Company's results of operations or financial condition. In
addition, the Company currently has a substantial investment in PT Buana, which
exclusively manufacturers powdered gloves, as well as a long term supply
contract with PIE Healthcare for the purchase of powdered gloves. Should the
demand for powdered gloves decline, due to the greater level of allergic
reactions associated with such gloves than powder-free latex or synthetic
gloves, then the Company will continue to be subject to the aforesaid
commitments. Conversions of powdered glove manufacturing capacity to powder-
free capacity requires substantial time, capital investment and know how, and
there can be no assurance such conversion could be made economically or at all,
in the event of a substantial decline in the demand for powdered gloves.
Dependence on Rubber Harvest and Latex Concentrate. The ability of
the Company to produce and purchase its products profitably is entirely
dependent upon the consistent availability, at competitive
7
<PAGE> 8
prices, of raw rubber harvested by independent growers in Malaysia and
Indonesia and locally processed by the Company and others into latex
concentrate. Any disruption in the consistent supply of rubber for latex
concentrate due to weather or other natural phenomena, labor or transportation
stoppages, shortages or other factors, could cause significant adverse effects
to the Company's results of operations and financial condition. In addition,
rubber is a commodity traded on world commodities exchanges and is subject to
price fluctuations driven by changing market conditions over which the Company
has no control. Increases in the price of latex concentrate have adversely
effected the Company's raw material costs in the past and could do so again.
International Operations. The Company's international manufacturing
operation has grown substantially, and, thus, the Company is increasingly
affected by the risks associated with international operations. Such risks
include: managing an organization in Indonesia; fluctuations in currency
exchange rates; the burden of complying with international laws and other
regulatory and product certification requirements; changes in such laws and
requirements; tariffs and other trade barriers; import and export controls;
international staffing and employment issues; and political and economic
stability. The inability to effectively manage these and other risks could
adversely effect the Company and its future operating results.
Asia Pacific Risk Factors. Social, political and economic instability
may be significantly greater in many of the Asian-Pacific countries than that
typically associated with the United States and other industrialized countries.
Varying degrees of social, political and economic instability could
significantly disrupt the source of the Company's supply of glove products.
Currencies of several Asian-Pacific countries, including Indonesia,
Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand, have recently
experienced significant declines in value against the U.S. dollar, commencing
with the devaluation of the Thai Baht in July 1997. As a result of such
declines, interest rates in many Asian-Pacific countries have risen sharply and
credit availability has been reduced. Companies in these countries with
significant indebtedness or costs denominated in foreign currencies that have
appreciated in relation to the local currency may have difficulty passing on
increased local currency costs to their customers and may face financial
difficulties and losses and may be unable to meet their obligations.
The economies of most of the Asian-Pacific countries are heavily
dependent upon international trade and are accordingly affected by protective
trade barriers and the economic conditions of their trading partners,
principally, the United States, Japan, China and the European Union. The
enactment by the United States or other principal trading partners of
protectionist trade legislation, reduction of foreign investment in the local
economies and general declines in the international securities markets could
have a significant adverse effect upon the economies of the Asian-Pacific
Countries.
Governments in certain of the Asian-Pacific countries participate to
a significant degree, through ownership interests or regulation, in their
respective economies. Action by these governments could have a significant
adverse effect on the economies of such countries.
Changes in Gross Margins. Certain of the Company's net product sales
are derived from products and markets which typically have lower gross margins
compared to other products and markets, due to higher costs and/or lower prices
associated with the lower gross margin products and markets. The Company
currently expects that its net product sales from powder-free gloves will
continue to increase as a percentage of total net product sales. In addition,
the Company is currently experiencing pricing pressures due to a number of
factors, including competitive conditions, consolidation within certain groups
of suppliers and changing technologies in the production of powder-free gloves
and increasing demand for new glove products. To the extent that these factors
continue, the Company's gross margins could decline, which would adversely
effect the Company and its future operating results.
Downward pressure on the Company's gross margins may be mitigated by
other factors, such as reduction in product costs and/or an increased
percentage of product sales from higher gross margin products, such as
powder-free gloves. The Company is aiming to reduce its product costs and to
increase its percentage of product sales from powder-free gloves. However,
there is no assurance that these efforts will be successful.
New Glove Products. The Company is planning to distribute a number of
new glove products, in addition to the glove products released in 1996,
including synthetic and powder-free vinyl gloves. There is no assurance that
these development efforts will be successful or that, if successfully
developed, these products will achieve commercial success.
Growth Dependencies. In general, the Company's future growth is
dependent on the Company's ability to successfully and timely enhance existing
products, develop and introduce new products, establish new distribution
channels, develop affiliations with leading market participants and continue to
develop its relationships with its existing customer base. The failure to
achieve these and other objectives could limit future growth and have an
adverse effect on the Company and its future operating results.
On a related note, the pressure to develop and enhance products, and
to establish and expand markets may cause the Company's selling, general and
administrative expenses to increase substantially, which could also have an
adverse effect on the Company and its future operating results.
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<PAGE> 9
Competition. The various markets in which the Company operates are
becoming increasingly competitive as a number of other companies develop and
sell products that compete with the Company's products in these markets.
Certain of these competitors have significantly more financial and technical
resources than the Company. The Company faces additional competitive factors
besides price, such as product quality, consistency, timeliness of delivery,
service, and the size and reliability of the manufacturer. These competitive
factors may result in, among other things, price discounts by the Company and
sales lost by the Company to competitors that may adversely affect the Company
and its future operating results.
Third-Party Distributors. The Company uses various channels to
market and distribute its products, primarily by sales to end-users via
third-party distributors. Third-party distributors are a substantial channel for
distribution to medical facilities. Accordingly, the Company's ability to
market and distribute its products depends significantly on its relationship
with third-party distributors, as well as the performance and financial
condition of these distributors. In the event that the Company's relationship
with its distributors deteriorates, or the performance or financial condition
of the distributor becomes unsatisfactory, the Company and its future operating
results could be adversely affected.
Excess or Obsolete Inventory. Managing the Company's inventory of
various size mix and product mix is a complex task. A number of factors,
including the need to maintain a significant inventory of certain sizes or
products which are in short supply or which must be purchased in bulk to obtain
favorable pricing, the general unpredictability of demand for specific products
and customer requests for quick delivery schedules, may result in the Company
maintaining excess inventory. Other factors, including changes in market demand
and technology, may cause inventory to become obsolete. Any excess or obsolete
inventory could result in price reductions and inventory write-downs, which, in
turn, could adversely effect the Company and its operating results.
Hiring and Retention of Employees. The Company's continued growth
and success depend to a significant extent on the continued service of senior
management and other key employees and the hiring of new qualified employees.
Competition for highly skilled business, technical, marketing and other
personnel is intense, particularly in the strong economic cycle currently
prevailing for companies. The loss of one or more key employees or the
Company's inability to attract additional qualified employees or retain other
employees could have an adverse effect on the Company and its future operating
results. In addition, the Company may experience increased compensation costs in
order to compete for skilled employees.
Stock Market Fluctuations. In recent years, the stock market in
general, including the Company's Common Stock, have experienced extreme price
fluctuations. The market price of the Company's Common Stock may be
significantly affected by various factors such as: quarterly variations in the
Company's operating results; changes in revenue growth rates for the Company;
changes in earnings estimates by market analysts; the announcement of new
products or product enhancements by the Company or its competitors;
speculation in the press or analyst community; and general market conditions or
market conditions specific to particular industries. There can be no assurance
that the market price of the Company's Common Stock will not experience
significant fluctuations in the future.
Dissolution and Liquidation of Accountants to Subsidiary. PT Buana
is a 70% owned subsidiary of the Company. The accounting firm of KPMG Hanadi
Sudjendro & Rekan ("HS&R") audited PT Buana's financial statements for the year
ended December 31, 1995, which financial statements are included in the
Company's audited financial statements for that year end. The Company has been
informed that HS&R was dissolved and liquidated during 1998 and has discontinued
providing audit and accounting services. As a result, both persons purchasing
Shares in the Offering and the Company may find it extremely difficult, if not
impossible, to seek legal recourse against HS&R for material misstatements or
omissions, if any, in the Company's registration statement, of which this
Prospectus is a part, or this Prospectus. At present, no facts have come to the
Company's attention which would indicate any need to make a claim against HS&R.
In addition, purchasers of the Shares will be limited in their ability to
allege liability of HS&R under Section 11 of the Securities Act for false and
misleading statements, if any, relating to the financial statements prepared by
HS&R. Furthermore, since HS&R have not included an updated consent to the
incorporation by reference of their financial statements into this Prospectus,
the so called "due diligence" defense which otherwise might be available to the
Company's directors and officers may be substantially reduced or eliminated
altogether.
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<PAGE> 10
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Shares by
the Selling Shareholders.
SELLING SHAREHOLDERS
A total of 5,434,813 Shares may be offered by the Selling
Shareholders, of which 1,252,538 shares consist of either Class A Common Stock
or the Common Stock into which the Class A Common Stock is convertible, on a
one share for one share basis. The following table sets forth certain
information with respect to the Selling Shareholders and the Shares which they
beneficially own. The Company will not receive any of the proceeds from the
sale of such Shares.
<TABLE>
<CAPTION>
Shares Shares to be
Shares Beneficially Being Beneficially
Owned Prior Offered Owned After
to Offering Offering (1)
-----------------------------------------------------------
Selling Shareholder Number Percent Number Percent
------- ----------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
MBf International Ltd., Hong Kong 1,682,275(2) 24.3% 1,682,275 (2) 0 (2) --- (2)
17th Floor, One Pacific Place
88, Queensway
Hong Kong
Wembley Rubber Products 3,752,538(2)(3) 54.3% 3,752,538 (2)(3) 0 (2) --- (2)
(M) Sdn. Bhd.
28th Floor, Wesma Denmark, 86
Jalan Amprang, 50450
Kuala Lumpur, Malaysia
</TABLE>
(1) Assumes the sale of all Shares offered pursuant to this Prospectus.
However, since the Shares offered pursuant to this Prospectus are not being
underwritten, no estimate can be given as to the exact number of Shares
that will be held by the Selling Shareholders after the offering.
(2) On March 31, 1998, Wembley entered into a call and put agreement with MBFI
whereby Wembley has the right to purchase up to 50% of the 1,682,275 Shares
owned by MBFI, for $6.00 per share for the one year period beginning March
31, 1999 and MBFI has the right to sell to Wembley up to 1,682,275 shares
for $5.00 per share during the same time period. It presently is not known
whether either of Wembley or MBFI will exercise their respective options
or, if exercised, the extent of such exercise. Should Wembley acquire some
or all of the Shares from MBFI as a result of an option exercise by either
Selling Shareholder, Wembley, in its sole discretion, may offer such
additionally acquired Shares pursuant to this Prospectus, provided that this
Prospectus is current and otherwise complies with all applicable provisions
of the federal Securities Laws then in effect. Pursuant to the terms of the
call and pat agreement, should MBFI sell any of the 1,682,275 shares other
than pursuant to the call and put agreement such shares would no longer be
subject to any of the terms or conditions of the call and put agreement.
(3) Consists of 2,500,000 shares of Common Stock and either 1,252,538 shares of
Class A Common Stock or the Common Stock into which the Class A Common
Stock is convertible on a one share for one share basis.
Based on information provided by the Selling Shareholders, and subject to
the limitations set forth in the notes to the table above, the Selling
Shareholders presently beneficially own approximately 78.6% of the Company's
outstanding Shares prior to this Offering.
In October 1995, the Company issued 250,980 shares of Common Stock to MBFI
for $1,200,000. MBfI loaned the Company $1,200,000 to pay for AHPC's 7%
Cumulative Preferred Stock, having a value of $1,200,000, which the Company had
purchased on September 29, 1995. MBfI agreed to accept shares of the Company's
Common Stock having a value of $1,200,000 in satisfaction of the Company's
indebtedness to it.
In October 1995, the Company issued 255,072 shares of Common Stock to MBfI
in exchange for (i) a 70% equity interest in PT Buana, an Indonesian
corporation owning a glove manufacturing factory, and (ii) a note receivable in
the amount of $737,769.
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<PAGE> 11
In June 1996, the Company issued 488,973 Shares to MBFI, the proceeds of
which were used to provide working capital to the Company.
In August 1996, the Company issued 672,269 Shares to MBFI, the proceeds of
which were used to provide working capital to the Company.
Wembley, one of the largest Malaysian powder-free glove manufacturers and
principal supplier of the Company's powder-free latex examination gloves,
entered into two agreements with the Company and MBFI. The agreements called
for: (1) the purchase by Wembley of all of the Company's authorized, issued and
outstanding Class A Common Stock (1,252,538 shares) from MBFI at $5.00 per share
for a value of approximately $6,270,000; however, this agreement does not relate
to the sale by MBFI to Wembley of any of the 1,682,275 shares of Common Stock of
the Company which MBFI proposes to sell by means of this Prospectus; and (2) the
purchase by Wembley of 2,500,000 unregistered shares of Common Stock at a price
of $2.70 per share from the Company, with demand registration rights. In
addition to the two agreements mentioned above, on March 31, 1998, Wembley also
entered into a call and put option agreement with MBFI whereby Wembley has the
right to purchase up to 50% of the 1,682,275 Shares owned by MBFI for $6.00 per
share for the one year period beginning March 31, 1999 and MBFI has the right to
sell to Wembley up to 1,682,275 shares for $5.00 per share over the same time
period.
The Company received $6,750,000 in proceeds from the sale of 2,500,000
shares of Common Stock which were applied toward working capital, expansion of
market share, introduction of new products, reduction of debt and introduction
of advanced technologies to the Company's 70% owned powdered latex glove
manufacturing factory in Indonesia. The Company received a fairness opinion from
The Griffing Group supporting the proposed equity infusion. The closing for
the acquisition of both the Series A Common Stock from the MBFI and the Common
Stock from the Company occurred on March 31, 1998.
Under the Exchange Act and the regulations thereunder, any person engaged
in a distribution of any Shares offered by this Prospectus may not
simultaneously engage in market-making activities with respect to any Shares
during the applicable "cooling off" period prior to the commencement of such
distribution. In addition, and without limiting the foregoing, the Selling
Shareholders will be subject to applicable provisions of the Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M under the
Securities Act, in connection with transactions in the Shares, which provisions
may limit the timing of purchases and sales of Shares by the Selling
Shareholders.
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<PAGE> 12
PLAN OF DISTRIBUTION
This Prospectus, as appropriately amended or as supplemented, may be used
from time to time by the Selling Shareholders, or their transferees, to offer
and sell the Shares in transactions in which the Selling Shareholders and any
broker-dealer through whom any of the Shares are sold may be deemed to be
underwriters within the meaning of the Securities Act. The Company will receive
none of the proceeds from any such sales. Other than the call and put agreement
between Wembley and MBFI, there presently are no other arrangements or
understandings, formal or informal, pertaining to the distribution of the
Shares.
The Company anticipates that resales of the Shares by the Selling
Shareholders will be effected from time to time on the open market in ordinary
brokerage transactions on the Nasdaq SmallCap Market ("Nasdaq SmallCap"), on
which the Common Stock is included for quotation, in the over-the-counter
market, or in private transactions. The Shares will be offered for sale at
market prices prevailing at the time of sale or at negotiated prices and on
terms to be determined when the agreement to sell is made or at the time of
sale, as the case may be. The Shares may be offered directly by the Selling
Shareholders or through brokers or dealers. A member firm of the National
Association of Securities Dealers, Inc. ("NASD") may be engaged to act as the
Selling Shareholders' agent in the sale of the Shares by the Selling
Shareholders and/or may acquire Shares as principal. Member firms
participating in such transactions as agent may receive commissions from the
Selling Shareholders (and, if they act as agent for the purchaser of such
Shares, from such purchaser), such commissions computed, in appropriate cases,
in accordance with the applicable rates of the NASD, which commissions may be
negotiated rates where permissible. Sales of the Shares by the member firm may
be made on the Nasdaq SmallCap from time to time at prices related to prices
then prevailing.
Participating broker-dealers may agree with the Selling Shareholders to
sell a specified number of shares at a stipulated price per share and, to the
extent such broker dealer is unable to do so acting as agent for the Selling
Shareholders, to purchase as principal any unsold shares at the price required
to fulfill the broker-dealer's commitment to the Selling Shareholders.
Broker-dealers who acquire Shares as principal may thereafter resell such
Shares from time to time in transactions on the Nasdaq SmallCap, in negotiated
transactions, or otherwise, at market prices prevailing at the time of sale or
at negotiated prices.
Upon the Company's being notified by the Selling Shareholders that a
particular offer to sell the Shares is made and a material arrangement has been
entered into with a broker-dealer for the sale of Shares, a supplement to this
Prospectus will be delivered together with this Prospectus and filed pursuant
to Rule 424(b) under the Securities Act setting forth with respect to such
offer or trade the terms of the offer or trade; including: (i) the number of
Shares involved; (ii) the price at which the Shares were sold; (iii) any
participating brokers, dealers, agents or member firm involved; (iv) any
discounts, commissions and other items paid as compensation from, and the
resulting net proceeds to, the Selling Shareholders;
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<PAGE> 13
and (v) other facts material to the transaction.
Shares may be sold directly by the Selling Shareholders or through agents
designated by the Selling Shareholders from time to time. Unless otherwise
indicated in any supplement to this Prospectus, any such agent will be acting
on a best efforts basis for the period of its appointment.
The Selling Shareholders and any brokers, dealers, agents, member firm or
others that participate with the Selling Shareholders in the distribution of
the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions or fees received by such persons and any
profit on the resale of the Shares purchased by such person may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Selling Shareholders will be subject to the applicable provisions of
the Securities Act and the Exchange Act and the rules and regulations
thereunder, including without limitation Regulation M under the Securities Act,
which provisions may limit the timing of purchases and sales of any of the
Shares by the Selling Shareholders. All of the foregoing may affect the
marketability of the Shares.
The Company will pay substantially all the expenses incident to this
offering of the Shares by the Selling Shareholders to the public other than
brokerage fees, commissions and discounts of underwriters, dealers or agents.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the Shares may not be sold
unless the Shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and the Company or
Selling Shareholders comply with the applicable requirements.
DESCRIPTION OF SECURITIES
The total number of shares of stock which the Company has authority to
issue is 10,000,000 shares of Common Stock, $0.01 par value and 1,252,538
shares of Series A Convertible Common Stock ("Series A Common Stock"), $0.01
par value.
The following description of the capital stock of the Company is a summary
and is qualified in its entirety by the provisions of the Company's Articles of
Incorporation and Bylaws, copies of which are on file with the Securities and
Exchange Commission.
COMMON STOCK
As of the date of this Prospectus, there are a total of 5,655,025 shares of
Common Stock outstanding. Holders of shares of Common Stock are entitled to
such dividends as may be declared by the Board of Directors from assets legally
available for that purpose, and are entitled at all meetings of shareholders to
one vote for each share held by them. The shares of Common Stock are not
redeemable and do not have any pre-emptive or conversion rights. All of the
outstanding shares of Common Stock are, and shares of Common Stock offered
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<PAGE> 14
hereby will be, fully paid and non-assessable. In the event of a voluntary or
involuntary winding up or dissolution, liquidation, or partial liquidation of
the Company, holders of Common Stock shall participate, pro rata with the
holder of Series A Common Stock, in any distribution of the assets of the
Company.
The shares of Common Stock have non-cumulative voting rights, which means
that shareholders holding more than 50% of the shares of Common Stock can elect
100% of the Class B directors of the Company if they choose to do so.
SERIES A COMMON STOCK
All of the Company's authorized 1,252,538 shares of Series A Common Stock
are issued and outstanding. All such shares of Series A Common Stock were
issued to MBfI pursuant to the Share Exchange Agreement in 1992 and 1,252,538
shares of Common Stock have been reserved for issuance upon conversion of the
Series A Common Stock. Except as discussed below, the terms of the Series A
Common Stock are substantially the same as the Company's Common Stock.
The Series A Common Stock is convertible at the option of the holder
thereof into shares of Common Stock on a one share for one share basis, subject
to customary antidilution adjustments.
Series A Common Stockholders vote as a separate class for the election of
all Class A Directors and with the holders of Common Stock as a single class
with respect to any other matters subject to a vote of the shareholders. The
holders of Series A Common Stock shall have one vote for each share of Common
Stock issuable upon conversion of each share of Series A Common Stock held.
The holder of Series A Common Stock is entitled to share in any dividends
of the Company or any distributions upon liquidation or dissolution of the
Company, ratable with the holders of Common Stock, based upon the number of
shares of Common Stock issuable upon conversion of each outstanding share of
Series A Common Stock at the time of the declaration of such dividend,
liquidation or dissolution.
As of the date of this Prospectus, the 1,252,538 shares of Common Stock
issuable under the conversion of the Series A Common Stock represent
approximately 18.1% of the then total issued and outstanding shares of Common
Stock. Such shares presently represent, upon conversion and coupled with Common
Stock Shares already owned by Wembley, a total ownership of approximately 54.3%
of the then outstanding shares.
TRANSFER AGENT
The transfer agent for the Common Stock is BankOne of Oklahoma City.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Maryland General Corporation Law ("MGCL") permits a corporation formed
in Maryland to include in its articles a provision eliminating or limiting the
liability of its directors and officers to the corporation or its stockholders
for money damages except for: (i) actual receipt of an improper benefit or
profit in money, property
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<PAGE> 15
or services, or (ii) active and deliberate dishonesty established by a judgment
or other final adjudication as being material to the cause of action
adjudicated in such proceeding. The Company's Articles of Incorporation (the
"Articles") include such a provision limiting liability to the fullest extent
permitted by the MGCL.
The Company's Articles authorize it to indemnify present and former
officers and directors and to pay or reimburse expenses in advance of the final
disposition of the proceeding to the maximum extent permitted from time to time
by Maryland law. The Company's Bylaws obligate the Company to indemnify and
advance expenses to present and former officers and directors to the maximum
extent permitted by Maryland law. The MGCL permits the Company to indemnify
its present and former officers and directors, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason
of their service in those or other capacities unless it is established that:
(i) the act or omission of the officer or director was material to the matter
giving rise to the proceeding and was committed in bad faith or was the result
of active and deliberate dishonesty; (ii) the officer or director actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the officer or director had reasonable
cause to believe that the act or omission was unlawful. The MGCL requires the
Company, as a condition to advancing expenses, to obtain: (a) a written
affirmation by the officer of director of the individual's good faith belief
that he has met the standard of conduct necessary for indemnification by the
Company as authorized by the MGCL; and (b) a written agreement by or on his
behalf to repay the amount paid or reimbursed by the Company if it shall
ultimately be determined that the standard of conduct was not met. The
Company's Bylaws permit the Company to provide indemnification and advance
expenses to a present or former officer or director who served a predecessor of
the Company in such capacity, and to any employee or agent of the Company or a
predecessor of the Company.
LEGAL MATTERS
The validity of the issuance of the Shares offered hereby has been passed
on for the Company by Coon & Schach LLC, Baltimore, Maryland.
EXPERTS
The consolidated balance sheets of MBf USA, Inc. as of and for the years
ended December 31, 1997 and December 31, 1996 and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1997, December 31, 1996 and December 31, 1995, incorporated
by reference in this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement (of
which this Prospectus is a part) on Form S-3 under the Securities Act with
respect to the Shares offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
The Registration Statement and any amendments thereto, including exhibits filed
as a part thereof, are available for inspection and copying as set forth below.
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<PAGE> 16
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. These reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; New
York Regional Office, Public Reference Room, Seven World Trade Center, 13th
Floor, New York, New York 10048; and Chicago Regional Office, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661. Copies of this material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site on the Internet that contains reports, proxy and
information statements and other information regarding registrants (including
the Company) that file electronically with the Commission via EDGAR. The
address of such Web site is http://www.sec.gov. The Common Stock is included
for quotation on the Nasdaq SmallCap Market and these reports, proxy statements
and other information concerning the Company may be inspected at the office of
the Nasdaq SmallCap Market, 1735 K Street, N.W., Washington, D.C. 20006.
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<PAGE> 17
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS 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 TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
<S> <C>
DOCUMENTS INCORPORATED BY
REFERENCE . . . . . . . . . . . . . . . . . . 2
THE COMPANY . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . 6
USE OF PROCEEDS . . . . . . . . . . . . . . . . 10
SELLING SHAREHOLDER . . . . . . . . . . . . . 10
PLAN OF DISTRIBUTION . . . . . . . . . . . . . 12
DESCRIPTION OF SECURITIES . . . . . . . . . . . 13
INDEMNIFICATION OF DIRECTORS
AND OFFICERS . . . . . . . . . . . . . . . . 14
LEGAL MATTERS . . . . . . . . . . . . . . . . . 15
EXPERTS . . . . . . . . . . . . . . . . . . . . 15
AVAILABLE INFORMATION . . . . . . . . . . . . . 15
</TABLE>
5,434,813 SHARES
WRP Corporation
(formerly known as MBf USA, Inc.)
COMMON STOCK
($0.01 PAR VALUE)
PROSPECTUS
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