<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 2000
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WILLIAMS CONTROLS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 84-1099587
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14100 SW 72nd Avenue
Portland, Oregon 97224
(503) 684-8600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
--------------------
Thomas W. Itin
President, Chairman and Chief Executive Officer
Williams Controls, Inc.
14100 SW 72nd Avenue
Portland, Oregon 97224
(503) 684-8600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
John W. Kellogg, Esq.
RaLea A. Sluga, Esq.
Friedlob Sanderson Paulson & Tourtillott, LLC
1400 Glenarm Place, Third Floor
Denver, Colorado 80202
(303) 571-1400
--------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: / /
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities
Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please 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>
<TABLE>
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO PROPOSED PROPOSED AMOUNT OF
REGISTERED BE REGISTERED MAXIMUM MAXIMUM REGISTRATION
OFFERING PRICE AGGREGATE FEE(2)
PER SHARE OFFERING
PRICE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock underlying 1,074,500 $2.00 $2,149,000 $568
Debentures
(1)
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Common Stock underlying Purchase 214,900 $2.375 $510,388 $135
Warrants (1)
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Common Stock underlying Placement 71,150 $2.40 $170,760 $46
Agent Warrants (1)
----------------------------------------------------------------------------------------------------------------------------
TOTAL 1,360,550 $2,830,148 $749
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</TABLE>
(1) Plus indeterminable number of shares of Common Stock as may be issuable by
reason of the anti-dilution provision for the Debentures, Purchase Warrants and
Placement Agent Warrants.
(2) Fee has been calculated in accordance with 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.
<PAGE>
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JULY 25, 2000
PROSPECTUS
[GRAPHIC]
1,360,550 Shares
Common Stock
--------------------
This Prospectus relates to the proposed sale of 1,360,550 shares of our common
stock by certain selling shareholders, of which 1,074,500 shares are underlying
debentures and 286,050 shares are underlying warrants. These selling
shareholders acquired their shares as part of a private placement of the
Company's securities. We will not receive any of the proceeds from the sale of
these securities.
The selling shareholders may sell all or any portion of their shares of common
stock in one or more transactions on the NASDAQ National Market or in private
negotiated transactions. We have agreed to pay registration expenses. The
selling shareholders will pay all selling expenses, including any brokerage
commissions.
Our common stock is traded on the NASDAQ National Market under the symbol
"WMCO". On July 21, 2000, the last reported sale price of our common stock on
the NASDAQ National Market was $1.8438 per share.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read this entire prospectus
and any amendments or supplements carefully before you make your investment
decision.
--------------------
SEE "RISK FACTORS" ON PAGE 4 FOR CERTAIN RISKS YOU SHOULD CONSIDER
BEFORE YOU PURCHASE ANY SHARES.
--------------------
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved
of these securities or passed upon the accuracy or adequacy of
this prospectus. Any representation to the contrary is
a criminal offense.
--------------------
The date of this prospectus is July 25, 2000.
<PAGE>
<TABLE>
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TABLE OF CONTENTS
Page
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION.............................................................................-3-
FORWARD LOOKING STATEMENTS......................................................................................-3-
WILLIAMS CONTROLS, INC..........................................................................................-4-
RECENT DEVELOPMENTS.............................................................................................-5-
RISK FACTORS....................................................................................................-7-
USE OF PROCEEDS................................................................................................-13-
SELLING SHAREHOLDERS...........................................................................................-14-
PLAN OF DISTRIBUTION...........................................................................................-16-
LEGAL MATTERS..................................................................................................-17-
EXPERTS........................................................................................................-17-
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. NO ONE HAS
BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE SHARES OF COMMON STOCK ARE NOT BEING OFFERED IN ANY JURISDICTION WHERE THE
OFFER IS NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE
DOCUMENTS.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document that we file
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to you free of
charge at the SEC's web site at http://www.sec.gov.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until this offering has been completed:
- Our Annual Report on Form 10-K for the year ended
September 30, 1999.
- Our Annual Report on Form 10-K/A for the year ended
September 30, 1999.
- Our Quarterly Report on form 10-Q for the fiscal
quarter ended December 31, 1999.
- Our Quarterly Report on form 10-Q for the fiscal
quarter ended March 31, 2000.
- Our Proxy Statement for the 2000 Annual Meeting of
Stockholders held on March 24, 2000.
- The description of our Common Stock contained in a
Registration Statement on Form 8-A, Commission File No.
0-18083, as filed with the Commission on November 1, 1989.
You may request free copies of these filings by writing or telephoning
us at our principal offices, which are located at the following address:
Williams Controls, Inc.
14100 SW 72nd Avenue
Portland, Oregon 97224
Attention: Corporate Controller
(503) 684-8600
FORWARD LOOKING STATEMENTS
ALL STATEMENTS CONTAINED IN THIS PROSPECTUS, AS WELL AS STATEMENTS MADE
IN PRESS RELEASES AND ORAL STATEMENTS THAT MAY BE MADE BY US OR BY OFFICERS,
DIRECTORS OR EMPLOYEES ACTING ON OUR BEHALF , THAT ARE NOT STATEMENTS OF
HISTORICAL FACT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN OR UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT
COULD CAUSE OUR ACTUAL RESULTS TO BE MATERIALLY DIFFERENT FROM HISTORICAL
RESULTS OR FROM ANY FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. THE "RISK FACTORS" SECTION OF THIS PROSPECTUS, COMMENCING ON PAGE 7,
SUMMARIZES CERTAIN OF THE MATERIAL RISKS AND UNCERTAINTIES THAT COULD CAUSE OUR
ACTUAL RESULTS TO DIFFER MATERIALLY. IN ADDITION TO STATEMENTS THAT EXPLICITLY
DESCRIBE SUCH RISKS AND UNCERTAINTIES, READERS ARE URGED TO CONSIDER STATEMENTS
THAT INCLUDE THE TERMS "BELIEVES," "BELIEF," "PLANS," "ANTICIPATES," "EXPECTS,"
"ESTIMATES, "MAY," "WILL" OR SIMILAR TERMS TO BE UNCERTAIN AND FORWARD-LOOKING.
ALL CAUTIONARY STATEMENTS MADE HEREIN SHOULD BE READ AS BEING APPLICABLE TO ALL
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR. IN THIS CONNECTION, INVESTORS
SHOULD CONSIDER THE RISKS DESCRIBED HEREIN AND SHOULD NOT PLACE UNDUE RELIANCE
ON ANY FORWARD-LOOKING STATEMENTS.
<PAGE>
WILLIAMS CONTROLS, INC.
We are a Delaware corporation formed in 1988. Our vehicle component
segment, our primary business segment, was founded by Norman C. Williams in 1939
and acquired by the Company in 1988. Our operating subsidiaries are divided into
two business units.
VEHICLE COMPONENTS
Our vehicle component product lines primarily include electronic
throttle control systems, exhaust brakes, pneumatic and hydraulic controls and
plastic injection molded products including automotive taillight systems. These
products are used in trucks, utility and off-highway equipment, transit buses
and underground mining machines. Markets for our electronic throttle control
systems are developing in smaller classes of trucks, diesel-powered pick-up
trucks and automobiles. We believe that gasoline-powered automobiles and pick-up
trucks may convert to the electronic throttle control system, although this
would require engine redesign by the automotive manufacturers which is presently
ongoing. In addition, the passenger vehicles market began the introduction of
adjustable foot pedal systems during 1999. We purchased an adjustable foot pedal
designer and manufacturer in July, 1999. We estimate that we have over a 65%
market share of electronic throttle control systems for Class 7 and 8 trucks.
The majority of these products are sold directly to original equipment
manufacturers such as Freightliner, Navistar, Volvo, Isuzu and Motor Coach
Industries. We also sell these products through a well-established network of
independent distributors. The major competitors in one or more of our product
lines include Morris Controls, Furon, Teleflex, Dura Automotive and KSR, Inc.
ELECTRICAL COMPONENTS AND GLOBAL POSITIONING SYSTEM
Our electrical components product line includes the design and
production of microcircuits, cable assemblies and other electronic products used
in the telecommunication, computer and transportation industries. Major
customers include Allied Signal, Raychem and Eaton Corp. Major competitors
include CTS, AMP and Nethode. The global positioning system product line
includes commuter railroad train tracking and agricultural cyber-farming using
global positioning and geographic information systems. Our major customers
include Chicago Metra, Tri-Rail, the Florida Department of Transportation and
Via Tropical Fruit.
These are our operating subsidiaries, all of which are 100% owned, and
a brief description of each operating subsidiary's business (the subsidiaries
which are reported as discontinued operations are not listed).
VEHICLE COMPONENTS
- WILLIAMS CONTROLS INDUSTRIES, INC. manufactures vehicle
components sold primarily in the transportation
industry.
- PROACTIVE ACQUISITION CORPORATION conducts research and development
activities related to adjustable foot pedals and manufactures
adjustable pedal systems.
- PREMIER PLASTIC TECHNOLOGIES, INC. manufactures plastic
components for the automotive industry.
- NESC WILLIAMS, INC. installs conversion kits to allow
vehicles to use compressed natural gas and provides
natural gas well metering services.
- WILLIAMS AUTOMOTIVE, INC. markets our products to the
automotive industry.
- WILLIAMS TECHNOLOGIES, INC. supports all subsidiaries of
our company by providing research and
development and developing strategic business
relationships to promote "technology partnering."
ELECTRONIC COMPONENTS AND GLOBAL POSITIONING SYSTEM
- APTEK WILLIAMS, INC. develops and produces sensors,
microcircuits, cable assemblies and other electronic
products for the telecommunications and the transportation
industries, and conducts research and
development activities to develop commercial applications
of sensor related products for our subsidiaries.
<PAGE>
GEOFOCUS, INC. develops train tracking and cyber-farming systems using
global positioning systems and geographical information systems.
We sell our products to customers in the truck, bus, automotive,
off-highway, telecommunication and other diversified industries worldwide. For
the fiscal year ended September 30, 1999, approximately 95% of our sales from
continuing operations were to customers in the vehicle component segment and 63%
of our sales from continuing operations were from sales of electronic throttle
control products. Approximately 20%, 15% and 14% of net sales from continuing
operations in fiscal 1999, 1998 and 1997, respectively, were to customers
outside of the United States, primarily in Canada, Mexico and Sweden, and, to a
lesser extent, in Europe, South America and Australia.
Our operating facilities engage in engineering, research and
development and quality control activities to improve the performance,
reliability and cost-effectiveness of our product lines. Our engineering staff
works closely with our customers in the design and development of new products
and adapting products for new applications. During fiscal 1999, 1998 and 1997,
we spent $3,424,000, $2,778,000 and $1,832,000, respectively, on these
activities for continuing operations. We intend to increase our research and
development expenditures in fiscal 2000 to design electronic throttle control
products compatible with gasoline powered vehicles, develop commercial
applications for inertia, tilt and position sensor products, and the development
of adjustable foot pedal and electronic throttle control systems for automotive,
sport utility vehicles, light trucks and heavy trucks, and further develop train
tacking products.
We produce our products from raw materials, including brass, aluminum,
steel, plastic, rubber and zinc, which currently are widely available at
reasonable terms. We rely upon, and expect to continue to rely upon CTS
Corporation and Caterpillar, Inc. as single source suppliers for critical
components and/or products as these suppliers are currently the only
manufacturers of sensors made specifically for our electronic throttle control
system. Although these suppliers have been able to meet our needs on a timely
basis, and appear to be willing to continue being suppliers, there is no
assurance that a disruption in a supplier's business, such as a strike, would
not disrupt the supply of a component.
We warrant our products to the first retail purchaser and subsequent
owners against malfunctions occurring during the warranty period resulting from
defects in material or workmanship, subject to specified limitations. The
warranty on vehicle components is limited to a specified time period, mileage or
hours of use, and varies by product and application. We have established a
warranty reserve based upon our estimate of the future cost of warranty and
related service costs. We regularly monitor our warranty reserve for adequacy in
response to historical experience and other factors.
As of February 29, 2000, we employed approximately 522 employees,
including approximately 129 union employees. The non-union employees are engaged
in sales and marketing, accounting and administration, product research and
development, production and quality control The union employees are engaged in
manufacturing vehicle components in our Portland, Oregon facility. Our
management believes that our relationship with our employees and the union are
good. We could experience change in non-union labor costs as a result of change
in local economies and general wage increases.
RECENT DEVELOPMENTS
On May 3, 2000, we completed the sale of our previously discontinued
Agriculture Equipment Segment operation. Proceeds at closing were $1,760,000 in
cash and notes plus the assumption by the buyer of $200,000 of liabilities. In
conjunction with the sale we received a note for $300,000 at 8% interest,
payable April 30, 2003. Additional proceeds, approximating $1,200,000 are
expected to be realized on or before September 30, 2000 from the future sale of
existing inventory to the buyer. In conjunction with the future sale of
inventory, we will receive a note at 8% interest, for any inventory not
purchased by September 30, 2000, payable in three years, with interest accruing
from until April 30, 2001. No loss in excess of that previously provided was
realized as a result of the sale
<PAGE>
of the discontinued Agriculture Equipment Segment.
On July 11, 2000, we announced that we had completed and signed a
definitive agreement for the merger of our plastic injection molding subsidiary,
Premier Plastic Technologies, Inc., into 3DM International, Inc. In exchange for
the issuance to us of 1.4 million shares of 3DM International stock,
representing approximately 7% of the outstanding 3DM International shares. We
intend to have this transaction considered as a tax-free reorganization under
IRC Section 368(a)(1)(A). Premier Plastic Technologies' operations have had a
substantial negative impact on the recent financial results of our company.
During the fiscal year ended September 30, 1999, Premier Plastic Technologies
had operating losses of over $4.4 million and also incurred operating losses of
nearly $2.0 million through the first six months of the current fiscal year. In
addition, we expect to see a substantial reduction in bank loans and other
liabilities once the final financing of the transaction is complete. The closing
of the transaction is subject to customary closing conditions, and 3DM
International's payment of all advances relating to Premier Plastic Technologies
under our secured lending facility with Wells Fargo Bank, subject to 3DM
obtaining sufficient financing.
As of July 15, 2000, approximately $2.2 million was due under certain
financing arrangements between us and Wells Fargo, our primary bank. These
payments have not been made. Additionally, we believe it is probable we will not
be in compliance with the debt covenants of our credit facility with the bank,
as of June 30, 2000.
As a result of the above, we are currently in discussions with the bank
regarding extensions of the amounts that were due and potential restructuring of
the financing arrangements. Additionally, we intend to seek waivers of any
covenant violations from the bank, as appropriate. We are also considering
additional sources of equity and debt financing.
<PAGE>
RISK FACTORS
You should carefully consider all of the information contained in this
prospectus before deciding whether to invest in our Common Stock and, in
particular, the following factors:
WE FOCUS OUR CORPORATE AND FINANCIAL RESOURCES IN A LIMITED
NUMBER OF CORE AREAS
From fiscal 1994 through fiscal 1996, we pursued an acquisition
strategy to integrate vertically through the acquisition of a sensor
manufacturing company and horizontally through the acquisition of companies in
similar industries that could benefit from our sensor and control experience.
During this period, we acquired several companies with products that could
benefit from sensor and control applications. In fiscal 1997, we changed our
diversification acquisition strategy to focus our corporate and financial
resources on opportunities emerging in our vehicle components business unit and
global positioning system train tracking markets. We cannot give assurances that
we will be able to capitalize on opportunities emerging in vehicle components or
global positioning system train tracking markets and/or the development of
commercial applications of sensor related products. In addition, if we are
successful in one or more endeavors, we cannot be certain that those endeavors
will be profitable. On March 16, 1998, we completed the sale of our subsidiary
comprising the automotive accessories business unit. On June 30, 1998, we
restructured our investment in Ajay Sports, Inc. to extend the payment terms of
all loans to June 30, 2001 and an increase in the dividend rate on our preferred
stock investment on June 30, 2001. On May 3, 2000, we completed the sale of our
agricultural equipment business unit.
On July 11, 2000, we announced that we had completed and signed a definitive
agreement for the merger of our plastic injection molding subsidiary, Premier
Plastic Technologies, Inc., into 3DM International, Inc. in exchange for the
issuance to us of 1.4 million shares of 3DM International stock, representing
approximately 7% of the outstanding 3DM International shares.
WE HAVE EXPERIENCED OPERATING LOSSES AND MAY HAVE A NEED FOR ADDITIONAL CAPITAL.
We have experienced continuing operating losses, from certain of our
subsidiaries. Although we have taken measures to improve operating results by
hiring new management, adopting business plans and instituting operational
changes, we can provide no assurance that these measures will be effective or
that the subsidiaries will achieve profitability.
We may require additional funds to finance these losses and to expand
into new markets. There can be no assurance that we will be able to raise
additional capital at the time necessary or on terms satisfactory to us. The
inability to raise sufficient capital would have a material adverse effect on
us.
SEVERAL SUBSIDIARIES HAVE A HISTORY OF OPERATING LOSSES THAT
MAY CONTINUE TO CAUSE US A LOSS IN THE FUTURE
Several of our subsidiaries have a history of operating losses.
Although we have taken measures to improve operating results by hiring new
management, adopting business plans and instituting operational changes, we can
provide no assurance that these measures will be effective or that the
subsidiaries will achieve profitability. Because of a history of operating
losses in our Premier Plastic Technologies subsidiary, on July 11, 2000, we
announced that we had completed and signed a definitive agreement for the merger
of Premier Plastic Technologies, Inc., into 3DM International, Inc. in exchange
for the issuance to us of 1.4 million shares of 3DM International stock,
representing approximately 7% of the outstanding 3DM International shares. We
intend to have this transaction considered as a tax-free reorganization under
IRC Section 368(a)(1)(A). The closing of the transaction is subject to customary
closing conditions, and 3DM International's payment of all advances relating to
Premier Plastic Technologies under our secured lending facility with Wells Fargo
Bank, subject to 3DM obtaining sufficient financing.
WE HAVE SIGNIFICANT INVESTMENTS IN AJAY SPORTS, INC.
As of March 31, 2000, we have invested approximately $6.8 million in
Ajay Sports, Inc., a company that markets and distributes golf clubs and
accessories, casual living furniture and is a franchisor of golf retail stores.
<PAGE>
Our chairman, Thomas W. Itin, is Chairman, Chief Executive Officer and President
of Ajay Sports and owns approximately 50.8% of the outstanding Ajay Sports
common stock as of March 29, 2000.
This investment is comprised of common and preferred stock of $4.7
million and notes receivable of $2.1 million. This investment could increase to
$8 million according to terms of an Intercreditor Agreement. In June, 1998, we
restructured the investment in Ajay Sports to provide for repayment of all such
amounts on June 30, 2001. At that time, the notes payable become due and the
dividend rate on the preferred stock increases substantially, which in effect
would require Ajay Sports to redeem the preferred stock. As part of our
investment, we have guaranteed approximately $1,340,000 of Ajay Sport's debt
payable to a bank.
Ajay Sports is currently experiencing financial difficulties and there
is no assurance that Ajay Sports will be able to pay the amounts to us when due
or the amounts owed to third parties that we have guaranteed. We would then have
to rely on the guarantee the chairman of our company has supplied us relating to
a portion of our investment in Ajay Sports and our guarantee of Ajay Sports'
debt.
OUR ELECTRONIC THROTTLE CONTROL SYSTEMS PRODUCTS MAY NOT BE ACCEPTED INTO NEW
MARKETS AND THE INTRODUCTION OF ELECTRONIC THROTTLE CONTROLS IN GASOLINE ENGINES
WILL REQUIRE MODIFICATION OR REDESIGN OF ENGINE COMPONENTS, WHICH MAY NOT OCCUR,
AND WE COMPETE AGAINST COMPANIES MUCH LARGER AND WITH GREATER FINANCIAL
RESOURCES THAN US
During fiscal 1999, we began the introduction of our electronic
throttle control systems product into the passenger vehicle market which
consists of cars, small trucks and sport utility vehicles. Although our
electronic throttle control systems product has been successful in the domestic
heavy duty truck market, there is no assurance that it will be fully accepted in
these new markets. Introduction of electronic throttle control in gasoline
engines will require modification or redesign of engine components that will be
dependent upon the timing of development by the automotive manufacturers and
their original equipment manufacturers. However, based on initial acceptance, we
expect that a substantial number of passenger vehicles will convert to
electronic throttle controls over the next five years. Our primary competitors
in the United States are Teleflex, Dura Automotive and KSR, Inc. Each of these
companies is substantially larger and has greater financial resources than us.
Furthermore, we have no control over the timing of the introduction of the
electronic throttle control into the automotive, small truck and sport utility
vehicle markets.
We purchased substantially all of the assets and assumed certain
liabilities of ProActive Pedals in July, 1999. ProActive owns patents and
designs for adjustable foot pedal systems and currently produces the adjustable
foot pedal for the Dodge Viper. We currently compete against Teleflex in the
adjustable foot pedal market, and we expect both Dura Automotive and KSR, Inc.
to enter the market with their adjustable foot pedal designs. Thus, we will be
competing against much larger competitors in these markets with financial
resources much greater than ours and with existing long-term supplier
relationships with the automotive industry.
OUR PRODUCTS ARE CLOSELY SCRUTINIZED FOR COMPLIANCE WITH NATIONAL SAFETY
STANDARDS AND REGULATIONS AND NON- COMPLIANCE MAY SUBJECT US TO A PRODUCT RECALL
Because many of our products are integral to the safety of vehicles using them
while operating on highways, our products must comply with regulatory standards
and close scrutiny from federal government agencies. Our vehicle component
products must comply with the National Traffic and Motor Vehicle Safety Act of
1966, as amended, and regulations promulgated thereunder. The National Highway
Traffic Safety Administration administers these standards and regulations and
conducts investigations. If, after an investigation, it finds that we are not in
compliance with any of its standards or regulations, among other things, it may
require us to recall the noncomplying products and repair or replace them. We
believe we are currently in compliance with their standards and regulations, but
any problems with our electronic throttle control system, which has been
critical to our success, could adversely affect our earnings.
THE DEMAND FOR OUR PRODUCTS IS HEAVILY DEPENDENT UPON THE
PERFORMANCE OF THE MANUFACTURING INDUSTRY WHICH
FLUCTUATES ACCORDING TO GENERAL ECONOMIC TRENDS
<PAGE>
The market for heavy trucks is cyclical. During periods of economic
expansion, when industrial production is increasing, demand for diesel engines
ordinarily increases. In opposition, during recessionary times, the diesel
engine industry is adversely affected by declines in demand. Recently, we have
experienced an increase in electronic throttle control systems sales, which we
believe is, in part, a result of the current economic expansion. Due in part to
the maturity of the heavy-diesel engine industry, there can be no assurance that
such an increase in sales related to economic expansion or other factors will be
sustained. These industries could experience downturns which would affect our
sales and our primary manufacturing facility.
THE MAJORITY OF OUR CONTINUING OPERATION SALES ARE CONCENTRATED IN THE VEHICLE
COMPONENT SEGMENT TO A FEW SIGNIFICANT CUSTOMERS, THE LOSS OF WHICH COULD
ADVERSELY AFFECT OUR EARNINGS
We sell our products to customers in diversified industries worldwide;
however, for the fiscal year ended September 30, 1999, approximately 95% of our
sales from continuing operations were to customers in the vehicle component
segment and 63% of our sales from continuing operations were from sales of our
electronic throttle control products. For the fiscal years ended September 30,
1999, 1998 and 1997, Freightliner accounted for 27%, 21% and 16%, respectively,
of net sales for continuing operations. Navistar accounted for 15%, 16% and 16%
of net sales from continuing operations for the fiscal years ended September 30,
1999, 1998 and 1997, respectively. Volvo accounted for 8%, 9% and 8% of net
sales from continuing operations for the fiscal years ended September 30, 1999,
1998 and 1997, respectively. General Motors accounted for 5%, 3% and 0%,
respectively, of net sales from continuing operations for the fiscal years ended
September 30, 1999, 1998 and 1997, respectively. We cannot be certain that we
will be able to retain these customers. The loss of one or more of our
significant customers, the material decline in sales to one or more of these
customers, or the economic downturn in one or more of our market areas could
adversely affect our earnings.
A SIGNIFICANT AMOUNT OF OUR CONTINUING OPERATION SALES ARE TO FOREIGN CUSTOMERS
WHICH COULD BE AFFECTED BY FOREIGN ECONOMIC CONDITIONS BEYOND OUR CONTROL
Approximately 20%, 15% and 14% of net sales for continuing operations
in fiscal 1999, 1998 and 1997, respectively, were to customers outside of the
United States, primarily in Canada, Mexico and Sweden, and to a lesser extent,
in Europe, South America and Australia. The loss of one or more of our
significant customers, a material decline in sales to one or more of these
customers, or an economic downturn in one or more of the company's market areas
could have a material adverse effect on our earnings. On January 1, 1999, the
eleven member states of the European Union, converted to a common currency, the
euro. We are unaware at this time of any potential material adverse effect
associated with the conversion because we only accept payments in U.S. dollars
and have no immediate plans to further expand our operations in Europe.
THE PRICE OF RAW MATERIALS FOR OUR PRODUCTS MAY FLUCTUATE AND AFFECT
PROFITABILITY
We produce our products from raw materials, including brass, aluminum,
steel, plastic, rubber and zinc, which currently are widely available at
reasonable terms. Although we recently experienced stable prices, prices for
aluminum, zinc, rubber, steel, and mechanical components such as gearboxes,
hydraulics, and contact position sensors could fluctuate and affect
profitability.
WE ARE RELIANT UPON SINGLE SOURCE SUPPLIERS FOR CRITICAL COMPONENTS AND PRODUCTS
WHOSE SUPPLY MAY BE DISRUPTED AND AFFECT PROFITABILITY
We rely upon, and expect to continue to rely upon CTS Corporation and
Caterpillar, Inc. as single source suppliers for critical components and
products. We manufacture a foot pedal using a contact position sensor
manufactured by Caterpillar, Inc. used exclusively on Caterpillar engines.
Caterpillar supplies this sensor and requires that its sensor be used on all
Caterpillar engines; therefore, we do not consider the Caterpillar sensor supply
to be at risk. Although these suppliers have been able to meet our needs on a
timely basis, and appear to be willing to continue being suppliers, we can
provide no assurance that a disruption in a supplier's business, such as a
strike,
<PAGE>
would not disrupt the supply of a component.
WE MAY BE LIABLE FOR INJURIES RESULTING FROM THE FAILURE OF BRAKING OR
ACCELERATION SYSTEMS USING OUR PRODUCTS
Several of our products are integral parts of braking and acceleration
systems for heavy equipment, buses, and long-haul trucks. The failure of any
part of these systems may result in personal injury to the operator or other
persons in the area. These persons may attempt to hold us liable for any or all
resulting injuries. While we are not aware of any material claims against us for
product liability, we cannot assure you that future claims will not be brought.
OUR WARRANTY RESERVE MAY NOT BE SUFFICIENT TO COVER FUTURE WARRANTY CLAIMS
AGAINST US
We provide a standard limited warranty on certain of our products to
the first retail purchaser and subsequent owners against malfunctions occurring
during the warranty period resulting from defects in material or workmanship,
subject to specified limitations. The warranty on vehicle components is limited
to a specified time period, mileage or hours of use, and varies by product and
application. We have established a warranty reserve based upon our estimate of
the future cost of warranty and related service costs. We regularly monitor our
warranty reserve for adequacy in response to historical experience and other
factors. We believe the warranty reserve is reasonable, based on our experience
with products and claims; however, we cannot assure you that the amount of this
reserve will be sufficient to cover future warranty claims against us.
BECAUSE SEVERAL OF OUR OFFICERS AND DIRECTORS OWN A SIGNIFICANT AMOUNT OF OUR
COMMON STOCK, THEY ARE IN A POSITION TO INFLUENCE OUR DIRECTION, POLICIES AND
ANY MATTER REQUIRING SHAREHOLDER APPROVAL
As of June 30, 2000, Thomas W. Itin, who is our Chairman, President,
Chief Executive Officer and Treasurer, beneficially owns approximately 30.7% of
our common stock. He also owns approximately 7.1% of Enercorp, Inc., an entity
that beneficially owns approximately an additional 10.0% of our common stock. In
addition, Mr. Itin is the Chairman, Chief Executive Officer and President of
Ajay Sports, Inc., a company in which we have invested approximately $6.8
million. As of June 30, 2000, H. Samuel Greenawalt, who is a director,
beneficially owns 1.0% of our common stock and approximately 2.1% of Enercorp,
Inc. Collectively, all of our executive officers and directors (eight persons)
as of June 30, 2000 beneficially own approximately 33.7% of our common stock. As
a result, our management, and Mr. Itin in particular, are in a position to
significantly influence our direction and policies, the election of the Board of
Directors and the outcome of any other matters requiring stockholder approval.
WHILE OUR PORTLAND MANUFACTURING FACILITY HAS LEVELS OF CONTAMINANTS THAT EXCEED
FEDERAL STANDARDS, IT IS NOT CONSIDERED A REPORTABLE EVENT AT THIS TIME, BUT
COULD BE REPORTABLE IN THE FUTURE CAUSING US REMEDIATION COSTS
Our operations result in the production of small quantities of material
identified by the Environmental Protection Agency of the United States
Government as "hazardous waste substances" which must be disposed of in
accordance with applicable local, state and federal guidelines.
Substantial liability may result to a company for failure, on the part of
itself or it contractors, to dispose of hazardous wastes in accordance with the
established guidelines, including potential liability for the clean up of sites
affected by improper disposals. We use our best efforts to ensure that any
hazardous substances are disposed of in an environmentally sound manner and in
accordance with these guidelines.
We have identified certain contaminants in the soil of our Portland,
Oregon manufacturing facility which we believe was disposed of on the property
by the previous property owner. We intend to seek indemnification from such
party for the costs of permanent monitoring, or cleanup if required. We have
retained an environmental consulting firm that has conducted tests to determine
the extent of any contamination. Based on the results of the tests and current
regulations, the contamination is not reportable event. We believe that we can
enforce available claims against the prior property owner for any costs of
monitoring the cleanup. We believe we are currently in
<PAGE>
compliance with environmental regulations.
SIGNIFICANT INCREASES IN THE INTEREST RATES OF OUR SIGNIFICANT BANK INDEBTEDNESS
COULD ADVERSELY AFFECT OUR EARNINGS
We have significant bank indebtedness that bears interest at rates that
fluctuate with the prime rate. Our net earnings would be adversely affected by
any significant increase in the prime rate. We cannot be certain that the prime
rate will not increase. In addition, our current bank credit facility secures
substantially all of our assets as collateral for the loan and requires us to
maintain a minimum tangible net worth and working capital. In addition, the bank
limits our capital spending in any one year period. These restrictions could
delay our current expansion plans unless the lender agrees to waive or increase
these capital spending limitations.
As of March 31, 2000, we had outstanding debt and capital lease
obligations of approximately $29,569,000 of which approximately $5,642,000 is
due during the fiscal year ended September 30, 2000 and approximately
$20,577,000 is due during the fiscal year ended September 30, 2001. In April,
2000, we issued 7.5% convertible subordinated debentures with net proceeds to us
of $1,965,000. In addition, we have the right to incur additional debt while the
debentures are outstanding. The indebtedness evidenced by the debentures,
including interest thereon, is subordinate and subject in right of payment to
the prior payment of all existing secured debt and to any secured debt we incur
in the future, other than to our affiliates. Each of the holders of the
debentures has entered into a subordination agreement which creates a
subordinated interest in favor of our primary bank, Wells Fargo, with respect to
our obligation under the debentures.
As of July 15, 2000, approximately $2.2 million was due under certain
financing arrangements between us and Wells Fargo, our primary bank. These
payments have not been made. Additionally, we believe it is probable we will not
be in compliance with the debt covenants of our credit facility with the bank,
as of June 30, 2000.
As a result of the above, we are currently in discussions with the bank
regarding extensions of the amounts that were due and potential restructuring of
the financing arrangements. Additionally, we intend to seek waivers of any
covenant violations from the bank, as appropriate. We are also considering
additional sources of equity and debt financing. There is no assurance that we
will be able to obtain the required waivers or that additional financing will be
available to us.
WE RELY ON KEY PERSONNEL
We are dependent upon the services of Thomas W. Itin. Mr. Itin is
Chairman, President, Chief Executive Officer and Treasurer. We have an
employment agreement with Mr. Itin that expires in August 2002. If Mr.
Itin's services were to become unavailable us for any reason, our success
could be materially and adversely affected. We do not maintain key man life
insurance.
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
We have never declared or paid any cash dividends on any class of our
common stock and we do not expect to declare cash dividends on our common stock
in the foreseeable future. Payment of any future dividends will depend upon our
earnings, financial condition and other business and economic factors our Board
of Directors considers relevant.
OUR CHARTER AND BYLAWS MAY DELAY OR FRUSTRATE TRANSACTIONS THAT
MAY BE BENEFICIAL TO SHAREHOLDERS
Several provisions of our charter and bylaws may delay or frustrate the
removal of incumbent directors and may prevent or delay a merger, tender offer
or proxy contest that is not approved by the Board of Directors, even if such
events may be beneficial to the interests of shareholders.
For example, our Board of Directors, without shareholder approval, has the
authority and power to issue all authorized and unissued shares of common stock
and preferred stock which have not otherwise been reserved for issuance. Thus,
the Board of Directors could currently
<PAGE>
issue 20,650,384 shares of common stock on such terms as the Board of Directors
determines. The Board of Directors could currently also issue 49,921,600 shares
of preferred stock and such preferred stock could have voting or conversion
rights which could adversely affect the voting power of the holders of common
stock. Furthermore, our charter provides for three classes of directors with
staggered terms of office. In addition, the Delaware General Corporation Law
contains provisions that may have the effect of making it more difficult or
delaying attempts by other to obtain control of us.
WE MAY BE UNABLE TO MAINTAIN THE LISTING FOR OUR COMMON STOCK ON THE NASDAQ
NATIONAL MARKET SYSTEM
Currently, our common stock is traded on the NASDAQ National Market
System. If we fail to maintain this listing for our common stock, and there is
no other exclusion from the definition of "penny stock" under the Exchange Act
available, then any broker engaging in a transaction in our securities would be
required to provide any customer with a risk disclosure document, the
compensation of the broker/dealer in the transaction and monthly account
statements showing the market values of our securities held in the customers
accounts. The bid and offer quotations and compensation information must be
provided prior to effecting the transaction and must be contained on the
customer's confirmation. If brokers become subject to these "penny stock" rules
when engaging in transactions in our securities, they would become less willing
to engage in such transactions, thereby making it more difficult for
shareholders to dispose of their shares of common stock.
OUR SUCCESS IN ADJUSTABLE FOOT PEDAL SYSTEMS IS DEPENDENT UPON OUR ABILITY TO
PROTECT OUR PATENTS AND OPERATE WITHOUT INFRINGING UPON THE PATENTS OF OTHERS
The primary assets of ProActive Pedals are patents for adjustable foot
pedal systems. Our ability to successfully compete in the market for adjustable
automobile foot pedals is dependent upon our ability to protect our proprietary
patented technology and operate without infringing upon the rights of others.
There are in existence other patents for adjustable automobile foot pedal
systems issued to other patent holders. We cannot assure you that the holders of
the competing patents would not claim that the ProActive Pedals' patents
infringe on their patents. If we are found to be infringing upon the
intellectual property rights of third parties, the party claiming infringement
could commence litigation against us and may obtain an injunction or other
equitable relief which could effectively block the distribution or sale of
allegedly infringing products. Under those circumstances, we could seek licenses
from such third parties, but there can be no assurance that any such licenses
could be obtained, or if obtained, would be on terms acceptable to us.
WE ARE DEPENDENT ON THE SALE OF ONE PRODUCT
We rely on the sales of electronic throttle control system products for
approximately 63% of our sales from continuing operations. Any material
reduction of sales due to increased competition, new competitors entering the
market, new technologies, economic downturns or other factors could adversely
affect our operating results. We use a contact position sensor in the electronic
throttle control systems. There are alternative sensor technologies which are
more expensive. If customers switch to an alternative sensor technology that we
could not provide, our sales and operating earnings could be affected materially
and adversely. Our electronic throttle control products are used on highway
vehicles. Any large-scale product failure could materially adversely affect our
reputation, future sales and operating profits.
FLUCTUATIONS IN LOCAL ECONOMIES AND GENERAL WAGES COULD AFFECT OUR NON-UNION
LABOR COSTS AND DECREASE PROFITABILITY
As of February 29, 2000, we employ approximately 522 employees,
including 129 union employees. Our non-union employees are engaged in sales and
marketing, accounting and administration, product research and development,
production and quality control. The union employees are engaged in manufacturing
vehicle components in our Portland, Oregon facility and are represented by the
International Union, United Automobile Workers of America and Amalgamated Local
492. We have a collective bargaining agreement with the unions that expires in
September 2002. Our management believes that our relationship with our employees
and the unions are
<PAGE>
good. We could experience changes in non-union labor costs as a result of
changes in local economies and general wage increases.
USE OF PROCEEDS
All of the Common Stock covered by this prospectus is being sold by the
selling shareholders. We will not receive any of the proceeds from those sales.
It is not likely that any outstanding warrants will be exercised unless
the market price of the Common Stock increases significantly. If the warrants
are exercised at their current prices, which is unlikely at this time, we will
receive net proceeds from such exercise of approximately $681,148. The proceeds
from the exercise of the warrants may be used for working capital purposes.
<PAGE>
SELLING SHAREHOLDERS
The table below shows certain information about the shares covered by
this prospectus and other shares of Common Stock beneficially owned by the
selling shareholders on the date of this prospectus. Our registration of these
shares does not necessarily mean that any selling shareholder will sell all or
any of its shares of Common Stock. This table assumes that all shares covered by
this prospectus will be sold by the selling shareholders and that no additional
shares of common stock are bought or sold by any selling shareholder. None of
the selling shareholders is the beneficial owner of one percent or more of the
outstanding shares of common stock (including the shares offered hereby).
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
TOTAL
SHARES NUMBER OF NUMBER
SHARES UNDERLYING SHARES NUMBER OF OF SHARES PERCENTAGE OF
SHARES UNDERLYING PLACEMENT OFFERED BY SHARES TO BE SHARES TO BE
UNDERLYING PURCHASE AGENT THIS HELD PRIOR HELD HELD AFTER
SELLING SHAREHOLDER DEBENTURES WARRANTS WARRANTS PROSPECTUS TO AFTER OFFERING
OFFERING OFFERING
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. Allen 50,000 10,000 -- 60,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Alvin R. Bonnette 7,500 1,500 -- 9,000 0 0 0%
Trustee
----------------------------------------------------------------------------------------------------------------------------
Gary P. Arnold 50,000 10,000 -- 60,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Ronald A. Bero 12,500 2,500 -- 15,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
John R. Bertsch 30,000 6,000 -- 36,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Harvey Bibicoff 12,500 2,500 -- 15,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Charles Brand 25,000 5,000 -- 30,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Richard Clayton 20,000 4,000 -- 24,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Delaware Charter 5,000 1,000 -- 6,000 0 0 0%
Guarantee & Trust
Company Ttee
FBO:
Edward Brody
----------------------------------------------------------------------------------------------------------------------------
Dolphin Offshore 60,000 12,000 -- 72,000 0 0 0%
Partners, L.P.
----------------------------------------------------------------------------------------------------------------------------
EBS Microcap Partners, 40,000 8,000 -- 48,000 0 0 0%
L.P.
----------------------------------------------------------------------------------------------------------------------------
EBS Partners, LP 50,000 10,000 -- 60,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
FBO Zev Wolfson IRA 24,500 4,900 -- 29,400 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Dennis Fortin 50,000 10,000 -- 60,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Charles Fridman 5,000 1,000 -- 6,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Hilltop Offshore, Ltd. 16,000 3,200 -- 19,200 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Hilltop Partners, L.P. 71,000 14,200 -- 85,200 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Billy P. Hudson 5,000 1,000 -- 6,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
JDN Partners, L.P. 50,000 10,000 -- 60,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Thomas Jennett/Jodi 7,500 1,500 -- 9,000 0 0 0%
Jennett Jt ten
----------------------------------------------------------------------------------------------------------------------------
John P. Junge 25,000 5,000 -- 30,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Leslie A. Kaser 5,000 1,000 -- 6,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Gustave & Lydia 37,500 7,500 -- 45,000 0 0 0%
Levinson
----------------------------------------------------------------------------------------------------------------------------
Emmanuel Metz 100,000 20,000 -- 120,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
R & D Investment 50,000 10,000 -- 60,000 0 0 0%
Partnership, LLP
----------------------------------------------------------------------------------------------------------------------------
<PAGE>
David Random 12,500 2,500 -- 15,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Shadow Capital LLC 12,500 2,500 -- 15,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Arthur & Marie Sterling 25,000 5,000 -- 30,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Garland S. Sydnor Jr. 25,000 5,000 -- 30,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Taglich Brothers, Inc. 12,500 2,500 -- 15,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
FBO Michael N. Taglich
401k Plan
----------------------------------------------------------------------------------------------------------------------------
Taglich Brothers, Inc. 12,500 2,500 -- 15,000 0 0 0%
FBO Robert F. Taglich
401k Plan
----------------------------------------------------------------------------------------------------------------------------
Michael Taglich 10,000 2,000 -- 12,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
The Wolfson Family 10,000 2,000 -- 12,000 0 0 0%
Trust
----------------------------------------------------------------------------------------------------------------------------
The Wolfson 3,500 700 -- 4,200 0 0 0%
Grandchildren Trust
----------------------------------------------------------------------------------------------------------------------------
Thirteen Pines 25,000 5,000 -- 30,000 0 0 0%
Partnership
----------------------------------------------------------------------------------------------------------------------------
Susan E. Thorstenn 5,000 1,000 -- 6,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Thomas Waggoner 25,000 5,000 -- 30,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Tad Wilson 12,500 2,500 -- 15,000 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Richard C. Oh 1,000 200 2,200 3,400 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Vincent Palmieri 1,000 200 2,200 3,400 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Laura Conroy 3,000 600 2,200 5,800 0 0 0%
Douglas E. Hailey 12,000 2,400 21,810 36,210 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Taglich Brothers, Inc. 57,500 11,500 38,340 107,340 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Ginia Sciannamaeo -- -- 550 550 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Tere D'Silva -- -- 550 550 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Robert Schroeder -- -- 1,100 1,100 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Luis Martins -- -- 1,100 1,100 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Michael C. Roesler -- -- 1,100 1,100 0 0 0%
----------------------------------------------------------------------------------------------------------------------------
Total 1,074,500 214,900 71,150 1,360,550
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
PLAN OF DISTRIBUTION
We are registering the Common Stock covered by this prospectus for the
selling shareholders. These shares may be sold or distributed from time to time
by the selling shareholders, by their donees and transferees or by their other
successors in interest. Such sales may be made in the over-the-counter market or
in negotiated transactions. Sales of shares in the over-the-counter market may
be by means of one or more of the following transactions:
- in a block trade in which a broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
- in transactions in which brokers, dealers or
underwriters purchase the shares as principal and
resell
the shares for their own accounts pursuant to this
prospectus; and
- in ordinary brokers' transactions and transactions in
which the broker solicits purchasers.
The selling shareholders also may sell these shares in accordance with
Rule 144 under the Securities Act.
We have agreed to pay the fees and expenses of registering the Common
Stock, including the reasonable fees and disbursements of persons retained by
us; however, we will not pay the commissions and discounts of underwriters,
dealers or agents.
<PAGE>
Except as set forth above, the selling shareholders have advised us
that they have made no arrangements or agreements with any underwriters, brokers
or dealers regarding the resale of the Common Stock prior to the effective date
of this prospectus. The selling shareholders may pay commissions or allow
discounts to any brokers or dealers participating in the resale of the Common
Stock, which commissions or discounts may be less than or in excess of
the customary rates of such brokers or dealers for similar transactions. The
Common Stock will be sold at market prices prevailing at the time of sale or at
negotiated prices which will be not less than prevailing market prices.
The participating selling shareholders in sales of the Common Stock and
any underwriters, brokers or dealers engaged by them may be deemed underwriters,
and any profits on sales of the Common Stock by them and any discounts,
commissions or concessions received by any selling shareholder or underwriter,
broker or dealer may be deemed to be underwriting discounts or commissions under
the Securities Act.
If the selling shareholder notifies us that a material arrangement has
been entered into with an underwriter, broker or dealer for the sale of the
Common Stock through a secondary distribution or a purchase by an underwriter,
broker or dealer, a supplemented prospectus will be filed, if required,
disclosing such of the following information as we believe is appropriate:
- the name of each such selling shareholder and of the
participating underwriter, broker or dealer;
- the number of Common Stock involved;
- the price at which such Common Stock was sold;
- the commissions paid or discounts or concessions
allowed to such underwriter, broker or dealer;
and
- other facts material to the transaction.
We have agreed to indemnify the selling shareholders against certain
liabilities relating to resale of the Common Stock under the Securities Act of
1933. These agreements provide for rights of contribution if
indemnification is not available.
We are unable to predict the effect which sales of the Common Stock
offered hereby might have upon our ability to raise further capital.
In order to comply with certain states' securities laws, if applicable,
the Common Stock will be sold in these states only through registered or
licensed brokers or dealers. In addition, in certain states, the Common Stock
may not be sold unless they have been registered or qualified for sale in such
states or an exemption from registration or qualification is available and
complied with.
LEGAL MATTERS
Friedlob Sanderson Paulson & Tourtillott, LLC, Denver, Colorado, will
pass on the validity of the Common Stock offered by this prospectus.
EXPERTS
The financial statements and schedule for the year ended September
30, 1997, included in our 1999 Annual Report on Form 10-K have been audited
by Horwath Gelfond Hochstadt Pangburn & Co., Denver, Colorado, independent
certified public accountants, as indicated in their reports on such financial
statements. We have incorporated these financial statements by reference in
this prospectus and in the related registration statement in reliance upon
the authority of such firm as experts in giving such reports.
The financial statements and schedules incorporated by reference in
this prospectus and elsewhere in the registration statement, to the extent and
for the periods indicated in their reports, have been audited by Arthur
Andersen LLP, independent public accountants, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
<PAGE>
July 25, 2000
[GRAPHIC]
1,360,550 Shares
Common Stock
-----------------------------------------
PRELIMINARY PROSPECTUS
-----------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than any
underwriting discounts and commissions, payable in connection with the sale of
the Common Stock being registered. All amounts are estimates except the SEC
registration fee.
SEC Registration and filing fee $ 789
NASD listing fee --
Printing fees 500
Accounting fees and expenses 10,000
Legal fees and expenses 10,000
Transfer and Warrant Agent fees
4,000
Miscellaneous 511
--------
Total $ 25,800
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law allows us to
indemnify any person against expenses including attorneys' fees, judgments,
fines and amounts paid in settlement, actually and reasonably incurred in a
proceeding (including any civil, criminal, administrative or investigative
proceeding) to which the person was a party by reason of the fact that he is
or was a director, officer, employee or agent of Williams Controls. Such
indemnity may be provided if the indemnified person acted in a good faith
manner which he reasonably believed to be in or not opposed to the best
interests of Williams Controls and, with respect to any criminal proceeding,
had no reasonable cause to believe that his conduct was unlawful. Unless
ordered by a court, indemnification generally may only be awarded after a
determination of independent members of the Board of Directors or a committee
thereof, by independent legal counsel or by vote of the shareholders that the
applicable standard of conduct was met by person seeking indemnification. To
the extent a director, officer, employee or agent is wholly successful on the
merits or otherwise in defense of any proceeding to which he was a party, he
is entitled to receive indemnification against expenses including attorneys'
fees, actually and reasonably incurred in connection with the proceeding.
Delaware law allows us to advance payments of indemnifiable expenses prior to
final disposition of the proceeding in question. Such advances of expenses
are permitted if the person furnishes us with a written agreement to repay
such advances if it is determined that he is not entitled to be indemnified
by Williams Controls.
A similar standard of care applies to derivative actions by or in the
right of Williams Controls, except that indemnification is limited solely to
expenses including attorneys' fees actually and reasonably incurred in
connection with the defense. In such actions, the person to be indemnified
must have acted in good faith, in a manner he believed to have been in our best
interest and must not have been adjudged liable to Williams Controls unless and
only to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expense which the
Court of Chancery or such other court shall deem proper. Indemnification is
otherwise prohibited in derivative suits in which a director is adjudged liable
to Williams Controls, or in connection with any proceeding charging improper
personal benefit to the director in which the director is adjudged liable for
receipt of an improper personal benefit.
Statutory provisions do not exclude other rights under our Certificate
of Incorporation, Bylaws, resolutions of our stockholders or disinterested
directors, or otherwise. These indemnification provisions continue for a person
who has ceased to be a director, officer, employee or agent of Williams Controls
and inure to the benefit of the heirs, executors and administrators of such
persons. Delaware law allows us to purchase and maintain insurance policies
which protect any director, officer, employee or agent against any liability
asserted against or incurred by him in such capacity arising out of his status
as such. Such policies may provide for indemnification whether or not we
would otherwise have the power to provide for it. We have not obtained policies
providing protection against liabilities imposed under the securities laws.
<PAGE>
Article VIII of our Bylaws provides that we shall indemnify our
directors, officers, employees and agents to the fullest extent permitted by the
Delaware General Corporation Law. In addition, we has entered into agreements
with our directors indemnifying them to the fullest extent permitted by the
Delaware General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
Williams Controls pursuant to the foregoing provisions, we have been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
The selling shareholders have agreed to indemnify, to the extent
permitted by law, Williams Controls, our directors, our officers and each person
who controls Williams Controls within the meaning of the Securities Act against
any losses, claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue statement of material fact or any omission or alleged omission
of a material fact required to be stated in a registration statement,
prospectus, private placement memorandum or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, in each case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information or affidavits relating to such investors or the placement agent
furnished to us for use therein.
ITEM 16. EXHIBITS
Exhibit
NUMBER DESCRIPTION
------ -----------
4.1 Form of Debenture Purchase Agreement
4.2 Form of Debenture
4.3 Form of Common Stock Purchase Warrant
4.4 Form of Debenture Placement Agreement
4.5 Form of Placement Agent Warrant
5.1 Opinion by Friedlob Sanderson Paulson & Tourtillott, LLC
23.1 Consent by Horwath Gelfond Hochstadt Pangburn & Co.
23.2 Consent by Arthur Andersen LLP
23.3 Consent by Friedlob Sanderson Paulson & Tourtillott,
LLC (see Exhibit 5.1)
24.1 Power of Attorney (included on page II-4 of this
registration statement)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration, by means of a post-effective
amendment, any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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 of proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Bloomfield, State of Michigan, on July 25, 2000.
WILLIAMS CONTROLS, INC.
By /s/ Thomas W. Itin
--------------------------
Thomas W. Itin,
President, Chairman and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas W. Itin, his attorney-in-fact, for
him in any and all capacities, to sign any amendments to this registration
statement, and any related registration statement filed pursuant to Rule 462(b),
and to file the sale, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact, or his substitute, may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas W. Itin Principal Executive Officer and Director July 25, 2000
------------------
Thomas W. Itin
/s/ Kim L. Childs Principal Accounting Officer and July 25, 2000
------------------ Controller
Kim L. Childs
/s/ H. Samuel Greenawalt Director July 25, 2000
------------------
H. Samuel Greenawalt
/s/ Timothy S. Itin Director July 25, 2000
------------------
Timothy S. Itin
</TABLE>
<PAGE>
INDEX TO EXHIBITS
NUMBER TITLE
------ -----
4.1 Form of Debenture Purchase Agreement
4.2 Form of Debenture
4.3 Form of Common Stock Purchase Warrant
4.4 Form of Debenture Placement Agreement
4.5 Form of Placement Agent Warrant
5.1 Opinion by Friedlob Sanderson Paulson & Tourtillott, LLC
23.1 Consent by Horwath Gelfond Hochstadt Pangburn & Co.
23.2 Consent by Arthur Andersen LLP
23.3 Consent by Friedlob Sanderson Paulson & Tourtillott,
LLC (see Exhibit 5.1)
24.1 Power of Attorney (included on page II-4 of this
registration statement)
