<PAGE> 1
As Filed with the Securities and Exchange Commission on September 22, 1995
File No. 33-59055
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT*
UNDER THE
SECURITIES ACT OF 1933
------------
CROWN LABORATORIES, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
Delaware 75-2300995
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) ID No.)
</TABLE>
6780 Caballo Street
Las Vegas, Nevada 89119
(702) 696-9300
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Principal Executive Offices)
CRAIG E. NASH, CHIEF EXECUTIVE OFFICER
CROWN LABORATORIES, INC.
6780 Caballo Street
Las Vegas, Nevada 89119
(702) 696-9300
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies of Communications to:
RONALD P. GIVNER, ESQ.
JEFFER, MANGELS, BUTLER & MARMARO
2121 Avenue of the Stars, Tenth Floor
Los Angeles, California 90067
(310) 203-8080
Fax: (310) 203-0567
Approximate date of commencement of proposed sale to the public: As soon as
possible after the Registration Statement is declared effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Proposed Maxi- Proposed Maximum Amount of
Title of Securities Amount to be mum Offering Aggregate Offering Registration
to be Registered Registered Price Per Share Price Fee
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Common Stock, $0.001 par value 4,301,712 Shs. $2.50 (1) $10,754,280 $3,708.37
Previously paid
$3,022.50
Total paid
$685.87
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</TABLE>
(1) Calculated pursuant to Rule 457(c).
_____________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
*Pursuant to Rule 429 the enclosed Prospectus constitutes a combined Prospectus
also relating to securities covered by Registration Statement No. 33-72912
(Common Stock) and constitutes a post-effective amendment to said Registration
Statement.
<PAGE> 3
P R O S P E C T U S ___________, 1995
CROWN LABORATORIES, INC.
COMMON STOCK
($0.001 PAR VALUE)
This Prospectus relates to 7,349,047 shares of the Common Stock of
CROWN LABORATORIES, INC. (the "Company"), which may be offered from time to
time by any or all of the Selling Stockholders named herein (the "Selling
Stockholders"), including shares to be received upon exercise of warrants. The
Company will not receive any proceeds from the sale of the shares offered
hereby but will receive certain proceeds upon exercise of the warrants, which
proceeds will be used for working capital. The Company estimates that the
expenses of this offering will be approximately $27,000, all of which will be
paid by the Company.
The Company has been advised by the Selling Stockholders that they may
sell all or a portion of the shares offered hereby from time to time on the
American Stock Exchange Emerging Company Marketplace (the "Amex-ECM") in
privately negotiated transactions, or otherwise, including sales through or
directly to a broker or brokers. Sales will be at prices and terms then
prevailing or at prices related to the then current market prices or at
negotiated prices. In connection with any sales, any broker or dealer
participating in such sales may be deemed to be underwriters within the meaning
of the Securities Act of 1933. See "Plan of Distribution."
The Common Stock of Crown Laboratories, Inc. is traded on the AMEX-ECM
(AMEX-ECM symbol: CLL.ec). On September 1, 1995, the last sale price of the
Company's Common Stock, as reported by the AMEX-ECM, was $2.50.
________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
________________________________
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" ON PAGES 6-9.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the
Securities and Exchange Commission (the "Commission") are incorporated herein
by reference: the Company's Annual Report on Form 10-KSB, Form 10-K/A-1 and
Form 10-KSB/A-2 for the fiscal year ended December 31, 1994, the Company's
Current Report on a Form 8-K and 8-K/A-1, for March 8, 1995, the Company's
Quarterly Reports on Form 10-QSB for the fiscal quarters ended March 31, 1995
and June 30, 1995, and the Company's Registration Statement on Form 8-A.
All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the securities under
this Prospectus shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents, except as to any
portion of any future Annual or Quarterly Report to Stockholders which is not
deemed to be filed under said provisions or any portion of a Proxy Statement
not deemed incorporated herein by reference. Any statement made in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that such statement is replaced
or modified by a statement contained in a subsequently dated document
incorporated by reference or contained in this Prospectus. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated in this Prospectus by reference, other than exhibits to
such documents. Written or oral requests for such copies should be directed to
Larry Rosenthal, Public Relations, or Craig Nash, Chief Executive Officer, 6780
Caballo Street, Las Vegas, Nevada 89119 (Telephone: (702) 696-9300).
AVAILABLE INFORMATION
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 prescribed rates at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: The Chicago Regional Office, Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago Illinois 60661-2511 and the New York
Regional Office, 7 World Trade Center, 12th Floor, New York, New York 10048.
Such reports, proxy statements and other information filed by the Company can
also be inspected at the offices of the American Stock Exchange, Inc., 86
Trinity Place, New York, New York 10006. Copies of such materials can also be
obtained by mail at prescribed rates upon written request addressed to the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended, with respect to the Common Stock offered hereby (the "Registration
Statement"). 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. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement, including the exhibits and financial statements and
schedules, if any, filed therewith or incorporated therein by reference.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement or incorporated herein by reference, each statement
being qualified in its entirety by such reference. The Registration Statement,
including the exhibits thereto, may be inspected without charge at the
Commission's principal office in Washington, D.C., and copies of any and all
parts thereof may be obtained from such office after payment of the fees
prescribed by the Commission.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements (including notes thereto)
appearing elsewhere in or incorporated by reference into this Prospectus.
THE COMPANY
Crown Laboratories, Inc. (the "Company") is engaged in the development
of, and intends to manufacture and market, a proprietary line of
pharmaceutically-balanced nutritional and medical application products
designed for the special needs of residents in nursing homes and patients
in hospitals. Generally, these individuals are over age 70, and prefer foods
that are easy to ingest, or are flavorful, or easily digestible, and
nutritionally complete. The Company's products will be provided in
aseptically sealed, flexible packages. Formulations are designed to provide a
maximum of nutrient and caloric support in easily consumable forms. The
Company currently intends to offer four liquid products and 26 dry-mixed
products for use by individuals with dietary restrictions including low
sodium diets and diabetic diets. Additionally, caloric enhancement and
nutritional supplement products will be available.
The Company's product lines will consist of standard products for
nursing homes and specialized products such as those for kidney dysfunction and
tube feeding. Currently the Company is in the final stages of completing the
liquid manufacturing line on which it will produce primary products for sale.
The Company will have limited sales until such line is complete and operational.
The Company has begun manufacturing its line of dry mix adult
nutritional and specialty dietary products. The major pieces of equipment
necessary to manufacture the Company's proprietary line of aseptic liquid
products have been received, and manufacturing will begin upon completion of
the commissioning of the equipment. The commissioning process has begun and is
expected to be completed during the fourth quarter of 1995. The commissioning
process is required to be completed in order to manufacture liquid products.
The Company has purchased equipment which the manufacturers have warranted will
be in compliance with the specification set forth by the United States Food and
Drug Administration ("F.D.A.").
The Company was incorporated in Delaware on February 23, 1989. The
Company's address and telephone number are 6780 Caballo Street, Las Vegas,
Nevada 89119; (702) 696-9300.
THE OFFERING
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Securities Offered(1) . . . . . . . . . . . . This Prospectus covers the
sale of 7,349,047 shares of
Common Stock to be sold by
certain Selling Stockholders,
including 1,559,064 shares of
Common Stock which may be sold
after the exercise of warrants.
Number of Shares of Common Stock
Outstanding on August 28, 1995(1) . . . . . . 12,841,361 shares.
Risk Factors . . . . . . . . . . . . . . . . An investment in the Common
Stock involves a high degree of
risk. Prospective investors should
review carefully and consider the
factors described in "Risk Factors."
</TABLE>
________________________
(1) Unless otherwise indicated, all references in the Prospectus to per
share data and number of shares exclude 4,761,437 shares of Common
Stock issuable upon exercise of outstanding warrants and options,
including options which have been granted under the 1992 Stock Option
Plan. However, 1,559,064 shares underlying 1,559,064 warrants are
included in the shares offered by the Selling Shareholders, but are
not included in outstanding shares.
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SUMMARY FINANCIAL INFORMATION
The following tables set forth for the periods indicated selected
financial information for Crown Laboratories, Inc.
STATEMENT OF OPERATIONS DATA:
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<CAPTION>
Year Ended Six Months Ended
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December 31, 1994 December 31, 1993 June 30, 1995 June 30, 1994
----------------- ----------------- ------------- -------------
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Sales(1) . . . . . $ -0- $ -0- $ -0- $ -0-
Net loss . . . . . (1,569,979) (660,964) (1,425,557) (478,152)
Net loss per share (.15) (.09) (.12) (.05)
</TABLE>
BALANCE SHEET DATA:
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<CAPTION>
December 31, 1994 June 30, 1995
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Working capital . . $1,354,684 (667,395)
Total assets . . . 6,065,044 7,972,559
Total liabilities . 1,355,581 2,875,373
Stockholders'
equity . . . . . . 4,709,463 5,097,186
</TABLE>
_________________
(1) The Company has manufactured in July 1995 its dry mixed products and
moved them into its distribution network. Sales of liquid products
will not commence until the Company completes commissioning of its
liquid manufacturing lines in Las Vegas, Nevada. See "Recent
Significant Developments -- Proposed Plant."
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RECENT SIGNIFICANT DEVELOPMENTS
PROPOSED PLANT
In September 1994, the Company entered into a five-year lease of a
62,000 square foot facility in Las Vegas, Nevada. The Company is currently
completing tenant improvements so that the plant can be commissioned by the
United States Department of Agriculture (U.S.D.A.) and the F.D.A. The facility
includes approximately 5,000 square feet of office facilities. The lease
provides for monthly payments of $25,080 for the first year, followed by
scheduled increases based upon a cost of living and a property tax increase
adjustment.
The Company has received its major manufacturing equipment and has
spent $5.8 million on equipment acquisition. It has also spent $1.4 million on
leasehold improvements for offices and upgrading the production area to meet
minimum standards required for manufacturing, which improvements are
substantially complete. The Company has received lease financing from G.E.
Capital for its processor in the amount of $514,000 to be repaid over five
years.
In March, 1994, the Company entered into a contract for $1,730,000 to
purchase an aseptic packing machine. As a result of the delays experienced by
the manufacturer in delivering the machine, including its entering into
bankruptcy proceedings, payments made by the Company and delays in obtaining
F.D.A. certification warranted by the manufacturer, the Company has a claim
against the manufacturer for an amount in excess of the remaining amounts owed
for the packaging machine. The Company has filed a claim in the German
bankruptcy court for $1,300,000. It was represented by Standard Chartered Bank
("Standard") and the manufacturer that Standard had an interest in this
packing machine. Based upon the representations made, the Company entered
into a letter of intent. Prior to entering into any loan documentation, the
Company discovered that the representations were untrue. Standard has alleged
that it has an interest in the machine and has filed a claim with the German
Bankruptcy Court. However, Standard has not produced documentation supporting
its position, and the Company's claims currently exceed the amount of
$1,000,000 which Standard is allegedly owed. The Company cannot predict the
ultimate outcome of either claims.
The telephone equipment, computer equipment and manufacturing software
have been financed by the respective suppliers on a 36-month basis. The
Company has received financing from First Security Bank and the Small Business
Administration in the amount of $1,250,000 which has been used for equipment
acquisition. No assurances can be given as to whether or not the Company will
be able to continue to obtain lease or equipment financing on a basis
favorable to the Company.
The Company has received its approval from the State of Nevada Health
Department to produce its dry mix product line for adult nutritional and
specialty dietary products. The major pieces of the equipment necessary to
manufacture the Company's proprietary line of aseptic liquid products have been
received, and commissioning of the equipment began at the end of second quarter
for aseptic processing approval. Prior estimates of December, 1994 were
rescheduled because the manufacturer of the aseptic filling and packaging
machine did not meet its promised delivery schedule. Additionally, the
Company's filler has not previously been certified by the F.D.A. before, and
additional monitoring devices and microbial testing have been required to meet
the protocol required by the process authority prior to submission to the
F.D.A. Commissioning of the equipment is required prior to the manufacturing of
aseptic items by the F.D.A. The purchased equipment has been warranted to be
manufactured according to the regulations promulgated by the F.D.A. for aseptic
equipment. The commissioning process for the aseptic equipment is expected to
be complete in the fourth quarter of 1995.
Based on the results of current testing, the Company believe that
the filler will meet the F.D.A. regulations required for aseptic fillers.
To facilitate completion of this process, the process authority has
recommended some minor changes be made in the filler installation, and such
changes are currently underway. Once complete, the final bacteriology tests
can be made. This final phase of testing will commence prior to the end of
third quarter, and the containers resulting from the test runs must be held
for a 21 day period of incubation. After conclusion of the testing, the
process authority estimates that it will take two weeks to prepare their
analysis and the Company's regulatory submissions to the F.D.A.
The Company, during this final completion period, will have completed
process verification, and begun to process, package, and market its three
products (sterile, normal saline, and potassium solutions) for medical
applications using its ultrafiltration system and irradiation. The medical
water products can be used as the prelude to the introduction of the liquid
nutritional products which will follow at the conclusion of aseptic
commissioning. The plant is mechanically operational and will be processing
liquids for sample and testing purposes prior to completion of the
commissioning.
The Company, which began shipping its dry mix products in late August,
1995, is now executing against its marketing plan. With the first liquid
products being available, the Company can begin to negotiate distributor and
end user contracts. The medical application water products will introduce the
Company into its marketplace and the Company can begin to generate sales
revenue from its liquid manufacturing line. Subsequent manufacturing by the
Company of its aseptic nutritionals will further enhance revenues.
The Company has also secured an option to purchase its current
manufacturing facility in Las Vegas, Nevada for $2,700,000 and intends to
pursue this option. The Company has also secured an option to lease a 17,300
square foot building in Puerto Rico which it intends to utilize to manufacture
its dry mix products and produce pre-mix for its liquid aseptic products.
PROPOSED FINANCING
The Company is currently seeking to raise up to $4.2 million (80
units) in equity financing through a private placement, each unit consisting of
25,000 shares of Common Stock and 12,500 warrants for 12,500 shares of Common
Stock exercisable at $3.00 per share, at $50,000 per unit. The Company may
seek to raise more than $4.2 million. Subsequent to December 31, 1994,
$2,373,750 has been raised from such private placement, of which $2,011,250 was
raised through June 30, 1995. Such private placement is scheduled to terminate
on September 30, 1995 but may be extended by the Company. Funds from such
private placement and prior private placements have and will be used to repay
indebtedness, to equip and build the proposed plant, for start-up manufacturing
and market introduction of products and for working capital. There can be no
assurances that the Company will be able to successfully complete the private
placement, or any alternative financing, or, if completed, that the Company
would not require additional funds at a later date, which might involve
substantial dilution to the Company's existing
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<PAGE> 8
stockholders. In the private placement, the securities will not be registered
under the Securities Act of 1933 and may not be offered or sold in the United
States absent registration or an applicable exemption from such registration.
The Company has also raised $1,000,000 in a private placement of
Series C Preferred Stock. The Series C Preferred Stock pays no dividends, but
imputes a 6% effective interest rate upon conversion into Common Stock which
will be accounted for over the time during which the Series C Preferred Stock
is outstanding. The preferred shareholder has the right to convert to Common
Stock at any time after 40 days from the date of issuance. The conversion rate
is determined by the acquisition value of the Series C Preferred Stock (plus
imputed interest) and the market price of the Common Stock at the time of
exercise.
LITIGATION
Crown v. Swinney et al. was filed by the Company in March 1994, in the
District Court for the State of Nevada, concerning the attempt of a
shareholder, Mr. Zannaniri, to sell unregistered securities of the Company by
public sale. The Company obtained a temporary restraining order preventing the
sale which has been in effect since March 1994. The Company believes its
liability, if any, will be limited to attorney's fees.
MANAGEMENT
Scott Hilley (43) became Vice President of Finance of the Company on
June 12, 1995. Mr. Hilley has over 20 years of experience in various areas of
financial management in major consumer products organizations and major money
center commercial banks. Prior to joining the Company, he served as business
controller for Goody Products, Inc. Earlier, Mr. Hilley spent over 10 years in
several key financial management positions within Nestle Foods, most notably,
business controller of United States chocolate operations. He holds a B.S. in
Banking and Finance and Management, and an M.B.A. from New York University.
RISK FACTORS
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES CERTAIN
SUBSTANTIAL RISKS AND PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS:
LIMITED OPERATING HISTORY; OPERATING LOSS
Since inception, the Company principally has been engaged in research
and development of its products. The Company did not have any sales for the
years ended December 31, 1993 and 1994. The Company, together with its
predecessors, Nash Nutritional Products, Inc. and Roe Pharmaceutical Co.,
formerly a majority owned subsidiary, incurred consolidated losses for the
period from March 3, 1980 (inception) to June 30, 1995. At June 30, 1995, the
Company's accumulated consolidated deficit was $5,381,435, while consolidated
Stockholders' Equity was $5,097,186. Lack of a liquid products manufacturing
facility has restricted the Company's marketing and sales efforts. The Company
and its operations are subject to the various risks inherent in the start-up
and development of a new business enterprise. Since the operating history of
the Company is limited, there can be no assurance that the Company will operate
profitably.
Working capital at June 30, 1995 was ($667,395) with approximately
$900,000 in accounts payable attributable to capital expenditures and leasehold
improvements. Since June 30, 1995, the Company has raised an additional
$1,476,250 in net proceeds from the sale of its equity securities. The Company
is presently seeking long-term financing to support its liabilities. There is
no assurance the Company will be able to secure the necessary financing on
terms and conditions which are acceptable to the Company.
NEED FOR MANUFACTURING FACILITY
The Company had previously produced its dry-mix and liquid dietary
products through contract manufacturers. However, prior arrangements had been
unsatisfactory in respect of timely manufacture and delivery and impact on
costs, particularly for liquid products. In order to assure a supply of its
liquid and dry-mix products
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<PAGE> 9
at a competitive price, management has determined that the Company must operate
its own manufacturing facility to produce both liquid and dry-mix products.
The Company is currently leasing a building in Las Vegas, Nevada, in which it
is constructing a manufacturing facility. The Company intends to acquire its
products only from its own manufacturing facilities.
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company believes that the net proceeds from the proposed private
placement discussed under "Recent Significant Developments -- Proposed
Financing," existing funds, and future revenues from sales of products, if any,
will satisfy the Company's cash requirements for at least twelve months after
the date hereof. The Company may seek to raise additional funds. Funds from
prior private placements, the sale of the Series C Preferred Stock and any
funds raised in the future have been and will be used to repay indebtedness, to
finance the completion of the manufacturing facilities, for start-up
manufacturing and market introduction of products and working capital.
However, no assurance can be given as to the amount of future sales, if any, or
when additional working capital may be required. There can be no assurance
that any financing will be available or available on attractive terms, or that
such financing would not result in a substantial dilution to the existing
stockholders.
RISK INHERENT IN OPERATIONS
The Company is subject to all the risks inherent in a small company
seeking to develop, market and distribute new products. The likelihood of the
Company's success must be considered in light of problems, expenses,
difficulties, complications and delays frequently encountered in connection
with development, introduction, marketing and distribution of new products in a
competitive environment.
COMPETITION
The Company's competitors possess substantially greater financial,
personnel, technological and marketing resources. The Company is not
presently, and may not be in the near or foreseeable future, a significant
factor in its markets. Many competitors have succeeded in establishing a
market share for their products. The Company can only expect to achieve
significant market share through service and product differentiation,
principally the plan to sell four ounce servings instead of the competition's
generally standard eight ounce packaging. While the Company believes it can
compete favorably in the market, there can be no assurance to that effect.
REGULATORY COMPLIANCE REQUIRED FOR OPERATIONS
The Company's operations are regulated principally by the F.D.A.,
although state and local regulations also apply. Failure to comply with
regulatory requirements could result in fines and other penalties, including
cessation of production. Additionally, there can be no assurance regulatory
requirements will not change or the Company will be able to economically
comply with changes if they occur.
Regulatory approval by the F.D.A. is required for the manufacturing
process, which principally entails certification of the processor, and the
aseptic filling and packaging machine. The manufacturers have assured the
Company that their equipment will meet applicable F.D.A. regulations. The
manufacturer of the processor has numerous processors approved in the United
States. The filler manufacturer has never received approval in the United
States because this type of filler is the first made by them for a United
States manufacturer. There can be no assurance that these two pieces of
equipment will be approved by the F.D.A. Failure to meet regulatory approval
will result in the Company's inability to manufacture and ship its liquid
products.
PRODUCT LIABILITY
Although formulation, manufacturing quality control and packaging are
regulated and subject to government inspection and to date there have been no
claims against the Company, there can be no assurance that the manufacturing
process will not result in a defect or taint that could result in harm to a
user. Although the Company carries product liability insurance of $6,000,000
per occurrence, there can be no assurance that any such harm will be an insured
event, or, if it is an insured event, that coverage will be sufficient. A
claim which is not
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<PAGE> 10
insured or for which coverage is not sufficient could have a material adverse
impact on the Company's business and prospects.
LACK OF PRODUCT PROTECTION
The Company regards the formulations of its products to be
proprietary, but presently it has no patent or other protective rights. The
Company is studying and evaluating the need and costs associated with patents
and other protective rights. Currently, the Company exerts substantial efforts
to protect trade secrets and to keep formulas and related process know-how
confidential. However, there can be no assurance that it will be successful in
these efforts. The Company has filed to register its trademark.
The Company has filed to protect its trademark and product names for
all of the products it intends to manufacture in the next two years. In
addition, the Company has filed and currently has a patent pending on its
primary liquid product including its process and content. No assurances can be
given that any patent will be issued.
RELIANCE UPON KEY PERSONNEL
The Company is largely dependent upon the personal efforts and
abilities of Craig E. Nash, Chairman of the Board of Directors and Chief
Executive Officer, as well as those of Scott O. Nash, Vice-Chairman of the
Board of Directors and President. Craig E. Nash and Scott O. Nash, who are
twin brothers, devote all of their time to the affairs of the Company. The
loss or unavailability of the services of any one of them may have a materially
adverse effect upon the Company. Presently, the Company has accident insurance
in the amount of $1,000,000 for Craig E. Nash and Scott O. Nash, respectively.
The Company does not have insurance for any non-accidental loss.
CONTROL BY EXISTING MANAGEMENT
Officers and directors as a group own 4,797,256 shares of Common Stock
out of 12,841,361 shares or 37.5%, including 3,755,223 shares or 29.24% owned
by Craig E. Nash and Scott O. Nash. Thus the management of the Company,
principally Craig E. Nash and Scott O. Nash, are able to continue to control
the policies and affairs of the Company.
RISKS OF THE OPTIONS AND WARRANTS
As of August 28, 1995, the Company has outstanding options to purchase
3,016,586 shares of common stock, and warrants to purchase 1,744,551 shares of
common stock. The existence of all of these options and warrants may have an
adverse effect on the terms upon which the Company would be able to obtain
additional capital. Furthermore, it might be expected that the holders of all
of such options and warrants would exercise their options at a time when the
Company could obtain equity capital on terms more favorable than those provided
for by the options and warrants. The shares underlying the warrants are
covered for resale by the Selling Stockholders by this Prospectus.
LIMITED MARKET FOR COMMON STOCK AND REVISIONS TO THE EMERGING COMPANY
MARKETPLACE
The Common Stock is quoted and traded on the American Stock Exchange
Emerging Company Marketplace. The American Stock Exchange recently announced
that it will no longer accept new issuers for the Emerging Company Marketplace,
but will continue trading existing issuers, including the Company. Therefore,
over time the Emerging Company Marketplace will cease to exist. The market for
the Common Stock must be considered limited and there can be no assurance that
a meaningful trading market will develop. Furthermore, prices quoted may not
represent the true value of the Common Stock.
NO DIVIDENDS LIKELY
Since its inception, the Company has had no earnings and has not paid
any dividends on its Common Stock. Payment of future dividends, if any, will
be determined by the Company's Board of Directors. In the foreseeable future,
the Company intends to retain all of its earnings to finance the development
and expansion of its business.
-8-
<PAGE> 11
POTENTIAL ANTI-TAKEOVER EFFECT OF AUTHORIZED PREFERRED STOCK AND CERTIFICATE OF
INCORPORATION
The Company is authorized to issue 5,000,000 shares of $0.001 par
value Preferred Stock with the rights, preferences, privileges and restrictions
thereof to be determined by the Board of Directors of the Company. Preferred
Stock can thus be issued without the vote of the holders of Common Stock.
Rights could be granted to the holders of Preferred Stock which could reduce
the attractiveness of the Company as a potential takeover target, make the
removal of management more difficult, or adversely impact the rights of holders
of Common Stock. Except for Series C Preferred Stock, no Preferred Stock is
currently outstanding, and the Company has no present plans for the issuance
of any additional shares of Preferred Stock.
The Company's Certificate of Incorporation contains certain provisions
designed to require a beneficial owner of over 25% of the Common Stock to
comply with certain provisions (regarding transactions with the Company and
membership on the Board of Directors) or pay certain prices (usually the
highest price paid) for the Common Stock in certain business combinations
involving the beneficial owner. These provisions are in addition to those
provided by Delaware law and apply to Craig Nash and Scott Nash.
SELLING STOCKHOLDERS
The following table shows for each of the Selling Stockholders (i) the
number and percentage of Common Stock of the Company beneficially owned by each
of them as of August 1, 1995, (ii) the number of shares covered by this
Prospectus (including shares of Common Stock underlying options and warrants),
and (iii) the percentage of ownership if all shares of Common Stock were sold.
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ---------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Abbe, Harry 5,000 5,000 0
Ades, Louis 37,500 37,500 0
Ades, Alan 18,750 18,750 0
Altman, Laurence 25,911 15,911 10,000
Altman, Judith 13,910 13,910 0
Altman, Herbert G. 52,410 52,410 0
Altman, Andrea 7,410 7,410 0
Alvarez Family L.C. 18,750 18,750 0
Aymerich, Daniel S. 7,500 7,500 0
Barone, Ronda 37,500 37,500 0
Berkowitz, Arthur M. 54,200 20,000 34,200
Profit Sharing Plan(3)
Berkowitz, Arthur M.(2) and 4,000 4,000 0
Marlene, U/I/T
Berkowitz, Arthur M. 11,968 11,968 0
Defined Contribution Plan(3)
Berkowitz, Arthur M.(3) 88,961 32,201 56,760
</TABLE>
-9-
<PAGE> 12
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Betor, Michael and Delores 6,308 6,308 0
Betor, Kristen 202 202 0
Blanchard, Lucius 37,500 37,500 0
Borja, Francisco J. & 9,375 9,375 0
Candace L.
Bothwell, Roger and Debbie 1,280 1,280 0
Breakstone Associates, Inc. 37,500 37,500 0
Brown, Kay L. 9,375 9,375 0
Campton Profit Sharing Plan 37,500 37,500 0
and Trust
Canali, Amelia 18,750 18,750 0
Cane, Myles(4) 60,000 10,000 50,000
Carrick, Linda A. (3) 79,000 29,000 50,000
Casella, Vince (5) and Thresa 8,000 8,000 0
Casella, Vince (5) 229,120 1.2% 179,126 50,000
Casella, Vincent Keough 34,064 34,064 0
Charles Slaughter 35,417 35,417 0
Foundation, The
Chastain, Steven G. 7,500 7,500 0
Chirinian, Johny and Cosetti 562,500 562,500 0
Cielsour, Inc. 50,000 50,000 0
Coeur-Barron (4) Family 1993 18,750 18,750 0
Trust, The
Cohen, Lawrence 37,500 37,500 0
Cohen, Dan and Nancy 37,500 37,500 0
Cohn, Irene 4,687 4,687 0
Cohn, David M. 18,750 18,750 0
Cohn, David M. and Jacobs, 18,750 18,750 0
Richard F. P.A. Age Based PSP
DTD 10-1-77
Connors, Denis 16,667 16,667 0
Cook, James & Stacy 37,500 37,500 0
Cranley, Robert E. and Shelly 37,500 37,500 0
Trust
</TABLE>
-10-
<PAGE> 13
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ---------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Damerin Trust DTD 12-20-88 18,750 18,750 0
Daniels, Derick, J. 112,500 112,500 0
Delaware Charter Guarantee & 18,750 18,750 0
Trust Co., John P. Kurlinski
IRA
Delaware Charter Guarantee & 37,500 37,500 0
Trust FBO Cranley, Robert, IRA
Demetree, Neil W. Irrevocable 11,250 11,250 0
Trust
Demetree, Mary A. 11,250 11,250 0
Demetree, Nicholas 10,000 10,000 0
Demetree, Tammy 5,499 5,499 0
Demetree, William C., Sr. 11,250 11,250 0
Demetree, William C., Jr. 11,250 11,250 0
Demetree, Shelly 20,000 20,000 0
Demetree, Mark C. 95,197 95,197 0
Demetree, Christopher C.(5) 635,691 3.6% 78,243 557,448 3.2%
Demetree, Alexandria 10,000 10,000 0
Demetree, Christopher(5) and 8,384 8,384 0
Shelly
Demetree, Elisa A. 67,941 67,941 0
Demetree, Jack C., Jr. 45,197 45,197 0
Demetree, Jack C., Sr. 37,500 37,500 0
Demetree, Jack C., III 10,000 10,000 0
Demetree-Doherty, Leslie A. 67,941 67,941 0
Dickinson, Phillip W. 37,500 37,500 0
Diskin, Arthur L. 37,500 37,500 0
Domingo, Mathew H. 1,000 1,000 0
Donner, Henry J. 3,333 3,333 0
Donner, Katherine W. 3,334 3,334 0
Custodian for
Melissa F. Donner
Dorweiler Family Trust DTD 18,750 18,750 0
11-16-93
</TABLE>
-11-
<PAGE> 14
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ---------- -------------- ------------ ----------
<S> <C> <C> <C>
Duchowny, Michael 18,750 18,750 0
Eagle Partners 56,250 56,250 0
Eismont, Frank & Marie 18,750 18,750 0
Eismont, Frank J. and Emily 37,500 37,500 0
Eme, Robert R. 10,000 10,000 0
Farkas, Marian 37,500 37,500 0
Ferber, Nicholas 18,750 18,750 0
Fieldstone, Ron & Linda 37,500 37,500 0
First Securities Trust 4,500 4,500 0
Custodian FBO Cyril Ferber
First Securities Trust 18,750 18,750 0
Custodian FBO Gamez, Jose
Edgaurdo IRA Account
First Securities Trust 37,500 37,500 0
Custodian FBO Jose Gaviria
First Securities Trust 37,500 37,500 0
Custodian FBO Izuka Relichi
First Securities Trust 37,500 37,500 0
Custodian FBO Melanie Ferber
First Securities Trust 18,750 18,750 0
Custodian FBO Eismont,
Jacqueline, IRA Account
Fletcher, James 4,000 4,000 0
FM Partners 56,250 56,250 0
Fredrick and Amelia Schimper 35,417 35,417 0
Foundation, The
Furst, Joseph K. and Constance 37,500 37,500 0
Furst Associates 150,000 150,000 0
Galofalo, S. & A. 8,000 8,000 0
Galofalo, E. & D. 8,000 8,000 0
Gamez, Jose 9,375 9,375 0
Gaviria, Jose M. and Elsie R. 37,500 37,500 0
Getz, Robert 2,667 2,667 0
Global Health Sciences Fund 726,458 726,458 0
Godfrey, William R. 37,500 37,500 0
</TABLE>
-12-
<PAGE> 15
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ---------- -------------- ------------ ----------
<S> <C> <C> <C>
Goldblum, Hillel Trust 3,333 3,333 0
Goldblum, Nathaniel Trust 3,333 3,333 0
Goldblum, Rishona Trust 3,333 3,333 0
Goodell, Keith 1,260 1,260 0
Grasso, Salvatore J. 2,000 2,000 0
Hantges, Jamie 37,500 37,500 0
Haramboure, Alfredo P. and 5,167 5,167 0
Diana M.
Harroz, Edward and Susan 2,267 2,267 0
Hefner, Family Trust 37,500 37,500 0
Helinger, Ron 37,500 37,500 0
Herman and Amelia Erhmann 33,333 33,333 0
Foundation
Hooker, Lee Allen(3) 91,478 18,750 72,728
Hyatt, Blair F. and Pamela 3,750 3,750 0
Ibarra, Miguel A. and 7,500 7,500 0
Isabel M.
Invesco Strategic Portfolios 759,792 759,792 0
Inc. Health Sciences Portfolio
Jablonski, James 13,333 13,333 0
Kaplan Associates 18,750 18,750 0
Katz, Sara M. 18,750 18,750 0
Kay, Cynthia for Jana Kay 2,200 2,200 0
Kay, Harold Profit Plan 9,900 9,900 0
Kay, Harold and Cynthia 26,050 26,050 0
Kay, David 2,200 2,200 0
Kouri, Paul 142,494 37,208 105,286
Kouri, Robert 8,472 7,000 1,472
Kurlinski, J. Parker and 18,750 18,750 0
Claire
Lifescience Technology 375,000 375,000 0
Partners
Lincoln Trust Company, 37,500 37,500 0
Custodian FBO Paul Gilbert
Lipsey, Simon and Carol 18,750 18,750 0
</TABLE>
-13-
<PAGE> 16
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ---------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Loman, Lawrence(6) and 245,879 1.3% 44,799 201,080 1.1%
Margaret
Lupo, John A. 37,500 37,500 0
Madriz, Alberto 18,750 18,750 0
Mahon, William P. S. and 37,500 37,500 0
Kathleen M. Family Trust DTD
12-16-92
Mathews, Calvin T.(7) 76,434 66,434 10,000
Matin, George 26,405 450 25,955
Matin, Ahmad 12,605 6,671 5,934
McClenahan, Bruce 37,500 37,500 0
Merhi, Mandouh and Ivy Lui 10,082 10,082 0
Milgram, Marc 37,500 37,500 0
MLPF&S Custodian Stanley 33,333 33,333 0
Weithorn
Moore, Raymond A. 5,000 5,000 0
Moster, Mark 11,428 11,428 0
Nachman, Seth 18,750 18,750 0
Nelson, Erven J. and Frankie 37,500 37,500 0
J. Trust
Pasek, Jeffrey Ivan 3,333 3,333 0
Pharmaceutical Medical 75,000 75,000 0
Technology Fund, L.P.
Philbrick, Jack and Ann 8,945 8,945 0
R.K. Grace(8) 113,688 113,688 0
Razook, G.A. 1,000 1,000 0
Reilly Capital Management 37,500 37,500 0
Group Ltd.
Resnick, Trevor and Jennifer 37,500 37,500 0
Resnick, Hyman and Marock, 18,750 18,750 0
Elfreda
Roeder, Robert P. 75,000 75,000 0
Rosenthal, Lawrence 77,000 6,000 71,000
Ross, Jessica 400 400 0
Russell, John and Pandora 1,260 1,260 0
</TABLE>
-14-
<PAGE> 17
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Schaff, Willber A. and Judy 37,500 37,500 0
Schabacker, James 3,781 3,781 0
Schlager, Ron 6,124 1,124 5,000
Schlau, Marc 29,333 29,333 0
Scott, Donald P. and 75,000 75,000 0
Mildred H.
Scuderi, Gaetano J. 9,375 9,375 0
Shadid, Ned 1,000 1,000 0
Simon, Ralph and Carletta 5,545 5,545 0
Simon, Sydney 280 280 0
Simon, Ralph, Jr. 1,500 1,500 0
Smith, Newton and Mary Ellen 480 480 0
Stanley, Ronald 37,500 37,500 0
Steiner, Anita Trust 3,334 3,334 0
Strochak, Debra G. 18,750 18,750 0
Swartz, Harold F. 18,750 18,750 0
Swavely, Robert and Ann 10,452 10,452 0
Swimmer, Leonard and Bobbi 37,500 37,500 0
Tapia, Eduardo J. and Zenia C. 15,000 15,000 0
Temple, Donald 9,375 9,375 0
Thomas, Lillie C.(6) 231,033 1.3% 31,114 199,919 1.1%
Tolkin, Bradley J. 37,500 37,500 0
Tom, Michael(9) and Marte 97,500 97,500 0
Trust
Tom, Paul 2,000 2,000 0
Tom, Michael(9) and Marte 15,467 15,467 0
Tom, Curtis 8,000 8,000 0
Tuchman, Roberto 18,750 18,750 0
Tuffanelli Family Trust 37,500 37,500 0
Tuffanelli, Shirley Jean Trust 37,500 37,500 0
Turken, Jack 18,750 18,750 0
</TABLE>
-15-
<PAGE> 18
<TABLE>
<CAPTION>
Number of Number of
Number of Shares Shares
Shares Covered Owned
Beneficially Percent of by this After Percent of
Selling Stockholder(1) Owned(1) Class* Prospectus(2) Offering(1) Class*
------------------------------- ------------ ---------- -------------- ------------ ----------
<S> <C> <C> <C>
Tyndall, Robert A. and 37,500 37,500 0
Sydney N. Family Trust
Uribe, John W. 37,500 37,500 0
Van Brocklin, Finley & Semma 37,500 37,500 0
Vendette, Vince and D. 8,000 8,000 0
Vendette, Vince & Diane 12,500 12,500 0
Vendette Corp. Group 34,063 34,063 0
Wagman, Jack M. and Normae S. 18,750 18,750 0
Family Trust
Wall Street Consultants, a 118,000 118,000 0
Nevada limited partnership(8)
Wallace, John 16,000 16,000 0
Weiner, Richard 6,667 6,667 0
Weiner, Mathew 3,334 3,334 0
Wetterling, James E. Jr. and 37,500 37,500 0
Dawn
Zahn, Spencer 18,750 18,750 0
Zuardo, Russell and Betty 37,500 37,500 0
Zych, Gregory A. and 18,750 18,750 0
Jacqueline L.
</TABLE>
----------------------------
* If over one percent
(1) Includes shares underlying warrants and options currently exercisable and
exercisable within sixty days of May 1, 1995.
(2) Includes shares underlying warrants whether or not currently exercisable.
(3) Director of the Company.
(4) A former director or employee of the Company
(5) Director and National Account Executive of the Company.
(6) Employee of the Company.
(7) Former Director and former President of the Company.
(8) Broker/dealers who received options from the Company in connection with
private placements.
(9) Former chief financial officer, controller and auditor of the Company.
-16-
<PAGE> 19
PLAN OF DISTRIBUTION
The shares may be sold by the Selling Stockholders (including shares
received upon exercise of warrants). Such sales may be made on the AMEX-ECM,
in privately negotiated transactions, or otherwise, at market prices or at
negotiated prices. The shares may be sold by one or more of the following
methods: (a) a block trade 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 in order to consummate the transaction; (b) purchase by
a broker or dealer as principal, and the resale by such broker or dealer for
its account pursuant to this Prospectus, including resale to another broker or
dealer; or (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers. In effecting sales, brokers or dealers engaged by
the Selling Stockholders may arrange for other brokers or dealers to
participate. Any such brokers or dealers may receive commissions or discounts
from the Selling Stockholders in amounts to be negotiated immediately prior to
the sale. Such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended. Any gain realized by such a broker or dealer on the
sale of shares which it purchases as a principal may be deemed to be
compensation to the broker or dealer in addition to any commissions paid to the
broker by the Selling Stockholders.
Upon being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the purchase by a
broker or dealer, a supplemental prospectus will be filed pursuant to Rule
424(c) of the Securities Act of 1933, disclosing (i) the name of such Selling
Stockholder and of the participating broker-dealers(s); (ii) the number of
shares involved; (iii) the price at which such shares were sold; and (iv) the
commissions paid or discounts or concessions allowed to such broker- dealer(s),
where applicable.
The shares covered by this Prospectus may be sold under Rule 144
rather than this Prospectus if they qualify for sale under Rule 144. Certain
of such shares may currently qualify for sale under Rule 144. The Company will
not receive any portion of the proceeds of the shares sold by the Selling
Stockholders, but will receive funds upon the exercise of warrants, which
funds, if any, will be used for working capital. There is no assurance that
any of the Selling Stockholders will sell any or all of the shares of Common
Stock offered by them.
The Selling Stockholders have advised the Company that during the
time they are engaged in distribution of Common Stock covered by this
Prospectus, they will comply with Rules 10b-5 and 10b-6 under the Exchange Act,
and pursuant thereto: (i) will not engage in any stabilization activity in
connection with the Company's securities; (ii) will furnish each broker through
which Common Stock covered by this Prospectus may be offered the number of
copies of this Prospectus which are required by each broker; and (iii) will not
bid for or purchase any securities of the Company or attempt to induce any
person to purchase any of the Company's securities other than as permitted
under the Exchange Act. Selling Stockholders who may be an "affiliated
purchaser" of the Company as defined in Rule 10b-6 have been further advised
that pursuant to Exchange Act Release 34-23611 (September 11, 1986), they must
coordinate their sales under this Prospectus with each other and the Company
for purposes of Rule 10b-6.
LEGAL OPINION
The validity of the issuance of the shares of Common Stock offered
hereby will be passed upon for the Company by Jeffer, Mangels, Butler &
Marmaro.
EXPERTS
The audited consolidated financial statements as of and for the
years ended December 31, 1994 and 1993 incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
-17-
<PAGE> 20
In June, 1993, Michael Tom, certified public accountant, became
Controller of the Company and on October 1, 1993, the Company retained Arthur
Andersen LLP as its independent public accountants. Mr. Tom was Chief
Financial Officer of the Company until June 1995. The change in independent
public accountants was approved by the Board of Directors. For the Company's
fiscal years ended December 31, 1992 and 1991, the financial statements did not
contain an adverse opinion or a disclaimer of opinion nor were they qualified
or modified as to uncertainty, audit scope, or accounting principles by Michael
Tom, C.P.A., except for an explanatory paragraph as to the Company's ability to
continue as a going concern. During the two fiscal years ended December 31,
1992 and 1991, and through the date of his resignation, there were not any
disagreements with Michael Tom, C.P.A. on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Michael Tom,
C.P.A., would have caused him to make a reference to the subject matter of the
disagreements in connection with his report, nor were there any "reportable
events" as defined by the Securities and Exchange Commission. During the two
fiscal years ended December 31, 1992 and 1991, and until the date of their
retention, the Company had not consulted with Arthur Andersen LLP, on the
application of accounting principles to a specified transaction, or the type of
audit opinion that might be rendered on the Company's financial statements or
any disagreements or reportable events.
-18-
<PAGE> 21
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER MADE HEREBY, 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 ANY OFFER TO BUY THE SECURITIES OFFERED HEREBY TO ANY PERSON IN
ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . 2
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 2
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
RECENT SIGNIFICANT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 9
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . 17
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
================================================================================
================================================================================
CROWN
LABORATORIES, INC.
COMMON STOCK
_______________________
PROSPECTUS
_______________________
_____________ __, 1995
================================================================================
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection
with the offering described in this Registration Statement. None of such
expenses will be paid by the Selling Stockholders.
<TABLE>
<CAPTION>
Total
-----
<S> <C>
Registration Fee Under Securities Act of 1933 . . . . . . . . $ 3,023
Photocopying . . . . . . . . . . . . . . . . . . . . . . . . 1,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . 5,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . 9,000
Blue Sky Fees and Expenses (including related legal fees) . . 8,500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 477
-------
Total . . . . . . . . . . . . . . . . . . . . . . . $27,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware General Corporation Law Section 145 provides that the
Registrant may indemnify any officer or director who was made a party to a suit
because of his position, including derivative suits, if he was acting in good
faith and in a manner he reasonably believed was in the best interest of the
Registrant, except, in certain circumstances, for negligence or misconduct in
the performance of his duty to the Registrant. If the director or officer is
successful in his suit, he is entitled to indemnification for expenses,
including attorney's fees. The Company's Certificate of Incorporation
eliminates director liability to stockholders or the Company for monetary
damages arising out of certain breaches by the directors of their fiduciary
duty of care. The duty of care refers to the fiduciary duty of directors to be
sufficiently diligent and careful in considering a transaction or taking or
refusing to take some corporate action. Finally, Registrant's By-Laws provide
for indemnification of Registrant's officers and directors, except in case of
gross negligence or willful misconduct, if they are a party to an action
because they were an officer or director.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
3(c) Certificate of Incorporation, as amended(1)
3(b) By-Laws, as amended(2)
4(f) See Exhibit 3(a) and (b)
5(a) Opinion of Jeffer, Mangels, Butler & Marmaro(3)
24(a) Consent of Jeffer, Mangels, Butler & Marmaro (contained in
Exhibit 5(a))
24(b) Consent of Arthur Andersen LLP (included as page II-6)(3)
</TABLE>
_________________
(1) Previously filed as exhibits to a Form 10-KSB/A-1 of Registrant for
the December 31, 1994 fiscal year.
(2) Previously filed as exhibits to a Form 8-K of Registrant for September
24, 1991.
(3) Filed herewith.
ITEM 17. UNDERTAKINGS
(a) The registrant as a small business issuer registering
securities under Rule 415 of the Securities Act will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to
include any additional or changed material information on the plan of
distribution.
S-1
<PAGE> 23
(2) For determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions in Item 15 hereof, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless, in the opinion of its counsel, the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
S-2
<PAGE> 24
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-3 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Las Vegas, Nevada on the 8th day of September 1995.
CROWN LABORATORIES, INC.
By: s/Craig E. Nash
--------------------------------------
CRAIG E. NASH, Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby constitutes
and appoints Craig E. Nash or Scott O. Nash as his true and lawful
attorney(s)-in-fact, each with full power of substitution to execute in the
name and on behalf of such person, individually and in each capacity stated
below, and to file, any and all amendments to this Registration Statement,
including any and all post-effective amendments.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------------------------------- ------------------------------------------------ ---------------------
<S> <C> <C>
s/Craig E. Nash Chief Executive Officer and Chairman of the September 11, 1995
--------------------------------- Board of Directors
CRAIG E. NASH
s/Scott O. Nash President and Vice Chairman of the Board of September 8, 1995
--------------------------------- Directors
SCOTT O. NASH
s/Scott E. Hilley Vice President Finance September 8, 1995
---------------------------------
SCOTT E. HILLEY
s/Christopher Demetree Director September 11, 1995
---------------------------------
CHRISTOPHER DEMETREE
Director September , 1995
---------------------------------
VINCENT J. CASELLA
s/Lee Allen Hooker Director September 6, 1995
---------------------------------
LEE ALLEN HOOKER
s/Arthur M. Berkowitz Director September 18, 1995
---------------------------------
ARTHUR M. BERKOWITZ
s/Linda Carrick Director September 7, 1995
---------------------------------
LINDA CARRICK
</TABLE>
S-3
<PAGE> 25
CONSENT OF COUNSEL
The consent of Jeffer, Mangels, Butler & Marmaro is contained in their
opinion, Exhibit 5(a).
S-4
<PAGE> 26
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
March 28, 1995 included in Crown Laboratories, Inc.'s Form 10-KSB and its Form
10-KSB/A1 and Form 10-KSB/A2 for the year ended December 31, 1994 and to all
references to our Firm included in this registration statement.
New York, New York ARTHUR ANDERSEN LLP
September 20, 1995
S-5
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit Page No.
------- --------
<S> <C> <C>
5.1 Opinion of Jeffer, Mangels, Butler & Marmaro
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[JEFFER, MANGELS, BUTLER & MARMARO LETTERHEAD]
REF./FILE NO.
September 8, 1995 55822-0001
Crown Laboratories, Inc.
6780 Caballo Street
P.O. Box 96205
Las Vegas, Nevada 89119
Re: Crown Laboratories, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
Crown Laboratories, Inc., a Delaware corporation (the "Company"),
proposes to file a Form S-3 Registration Statement (the "Registration
Statement") for the sale of 4,301,712 shares of the Company's Common Stock,
$0.001 par value (the "Shares") by certain selling stockholders of the Company
identified in the Registration Statement, including 1,559,064 Shares to be
issued upon exercise of Warrants.
In rendering the following opinion, we have examined and relied only
upon the documents, certificates of officers of the Company as are specifically
described below. In our examination, we have assumed the genuineness of all
signatures, the authenticity, accuracy and completeness of the documents
submitted to us as originals, and the conformity with the original documents of
all documents submitted to us as copies. Our examination was limited to the
following documents and no others:
1. Certificate of Incorporation of the Company, as amended to date;
2. By-Laws of the Company, as amended to date;
3. Resolutions adopted by the Board of Directors of the Company
authorizing the Shares and the Warrants;
4. The Registration Statement, together with all amendments thereto,
exhibits filed in connection therewith and incorporated therein by reference
and form of prospectus contained therein including all documents incorporated
therein by reference;
<PAGE> 2
JEFFER, MANGELS, BUTLER & MARMARO
Crown Laboratories, Inc.
September 8, 1995
Page 2
5. A Certificate of Good Standing for the Company from The Delaware
Secretary of State.
6. The form of the Warrants; and
7. A Certificate from Officers of the Company as to certain factual
matters.
We have not undertaken, nor do we intend to undertake, any independent
investigation beyond such documents and records, or to verify the adequacy or
accuracy of such documents and records.
Based upon and subject to the foregoing, it is our opinion that the
outstanding Shares are, and the Shares to be issued upon exercise of the
Warrants, when issued in accordance with the terms of the Warrants will be,
legally-issued, fully-paid and nonassessable shares of common stock of the
Company.
We hereby consent to the filing of this opinion as an exhibit in the
Registration Statement; to the filing of this opinion in connection with such
filings of applications as may be necessary to register, qualify or establish
eligibility for an exemption from registration or qualification of the Shares
under the blue sky laws of any state or other jurisdiction although we express
no opinion as to compliance with any securities laws herein; and to the
reference to this Firm in the prospectus under the heading "Legal Opinion". In
giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission promulgated thereunder.
The opinion set forth herein are based upon the federal laws of the
United States of America, the laws of the State of California and the corporate
laws of the State of Delaware all as now in effect. We express no opinion as to
whether the laws of any particular jurisdiction apply, and no opinion to the
extent that the laws of any jurisdiction other than those identified above are
applicable to the subject matter hereof.
The information set forth herein is as of the date of this letter. We
disclaim any undertaking to advise you of changes which may be brought to our
attention after the effective date of the Registration Statement.
Very truly yours,
JEFFER, MANGELS, BUTLER & MARMARO
