<PAGE>
As Filed with the Securities and Exchange Commission on October 3, 1996
File No. 333-____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------
OMEGA ENVIRONMENTAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 91-1499751
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) ID NO.)
19805 North Creek Parkway
P.O. Box 3005
Bothell, Washington 98041-3005
(206) 486-4800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES)
LOUIS J. TEDESCO
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
OMEGA ENVIRONMENTAL, INC.
19805 North Creek Parkway
P.O. Box 3005
Bothell, Washington 98041-3005
(206) 486-4800
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 LLP
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. [ ]
In delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Amount Proposed Proposed Maximum Amount of
Title of Securities to be Maximum Offering Aggregate Offering Registration
to be Registered Registered Price Per Share Price Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.0025 par value 1,563,500 Shs $1.6875 (1) $2,638,406.25 $909.80
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</TABLE>
(1) Calculated pursuant to Rule 457(c).
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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.
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<PAGE>
P R O S P E C T U S October ___, 1996
OMEGA ENVIRONMENTAL, INC.
Common Stock
($0.0025 Par Value)
---------------------
This Prospectus relates to 1,563,500 shares of the Common Stock, par value
$0.0025 per share, of Omega Environmental, Inc. (the "Company"), which may be
offered from time to time by certain shareholders of the Company (the "Selling
Stockholders"). The Company has been advised by the Selling Shareholders that
they or their successors may sell all or a portion of the securities offered
hereby from time to time in the over-the-counter market, 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
an underwriter within the meaning of the Securities Act of 1933. See "Plan of
Distribution." The Company will receive no part of the proceeds of such sales,
but will receive funds upon the exercise of warrants, which amount would be used
for working capital.
---------------------------------
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.
---------------------------------
FOR INFORMATION REGARDING CERTAIN RISKS
RELATING TO THE COMPANY, SEE "RISK FACTORS" ON PAGES 5 TO 9
---------------------------
All expenses incurred in connection with this offering, which expenses
are not expected to exceed $20,000 are being borne by the Company.
The Common Stock of Omega Environmental, Inc. is traded on Nasdaq National
Market (Symbol: OMEG). On October 1, 1996, the last sale price of the
Company's Common Stock was $1.6875.
<PAGE>
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 10K and Form 10-K/A for the
fiscal year ended March 31, 1996; and Company's Quarterly Report on Form 10Q for
the fiscal quarter ended June 30, 1996.
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 thereof
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 Dan
E. Steigerwald, Chief Financial Officer, 19805 North Creek Parkway, P.O. Box
3005, Bothell, Washington 98041-3005 (Telephone: (206) 486-4800).
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 606612511 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 National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. 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 S3 under the Securities Act of 1933, as amended,
with respect to the securities 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.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS, INCLUDING THE NOTES TO SUCH FINANCIAL
STATEMENTS. UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION, SHARE AND
PER SHARE INFORMATION IN THIS PROSPECTUS ASSUME (I) NO EXERCISE OF OPTIONS TO
PURCHASE AN AGGREGATE OF UP TO 742,234 SHARES GRANTED TO AN INVESTMENT BANK IN
CONNECTION WITH THE PRIVATE PLACEMENT OF THE COMPANY'S SECURITIES; (II) NO
CONVERSION OF 500 SHARES OF SERIES B PREFERRED STOCK; AND (III) NO EXERCISE OF
OPTIONS TO PURCHASE AN AGGREGATE OF UP TO 9,401,000 SHARES GRANTED OR AVAILABLE
TO BE GRANTED TO EMPLOYEES, OFFICERS, DIRECTORS AND CONSULTANTS PURSUANT TO
STOCK OPTIONS AND STOCK PURCHASE PLANS. THE TERM "COMPANY" OR "OMEGA" REFERS TO
OMEGA ENVIRONMENTAL, INC. AND ITS SUBSIDIARIES. REFERENCES TO YEARS IN FINANCIAL
DATA ARE TO THE COMPANY'S FISCAL YEAR ENDED MARCH 31.
THE COMPANY
Omega Environmental, Inc. ("Omega" or the "Company") was organized in
September 1990 to become the first national turnkey provider of products and
services to owners of underground storage tank ("UST") systems which are subject
to increasing regulations from the U.S. Environmental Protection Agency, as well
as state and local regulatory agencies. Over the last year, the Company has
been placing increasing emphasis on developing market driven service businesses
such as new service station and convenience store construction, station upgrades
and reimaging, and installation of state-of-the-art electronic equipment and
customer-interface devices such as pay-at-the-pump and information management
systems. As an essential part of its market-driven strategy, the Company is
also placing greater emphasis on its ability to provide after-sale service of
the increasingly complex equipment being installed in service stations and
convenience stores. The Company now offers a large range of services, including
facilitation of equipment and project financing, for the operators and owners of
fueling facilities in the United States. Currently, the Company has units
operating in 31 states. The Company also established a subsidiary in Mexico and
has joint ventures with limited operations in Argentina and Spain.
The Company derives its revenues from the removal of leaking and outdated
USTs, construction, including service stations and convenience stores, soil and
groundwater remediation services, the sale and installation of new UST systems,
and the distribution, installation and servicing of petroleum storage and
dispensing equipment. The Company is expanding its maintenance service
capabilities, particularly for large clients as an outsourcing alternative.
The Company has incurred significant losses since inception. For the
fiscal years ended March 31, 1996 and 1995, the Company had net losses of
$21,442,000 and $17,174,000 respectively. The Company incurred a net loss of
$783,000 and $343,000 for the quarters ended June 30, 1996 and 1995,
respectively. Operations have not generated sufficient cash to cover current
obligations.
The Company's offices are located at 19805 North Creek Parkway, P.O.
Box 3005, Bothell, Washington 98041-3005, and its telephone number is
(206) 486-4800.
THE OFFERING
Common Stock offered by the Selling Stockholders . . . . . . 1,563,500 shares
Common Stock outstanding as of August 31, 1996 . . . . . . . 43,379,780 shares*
Nasdaq National Market Symbol. . . . . . . . . . . . . . . . "OMEG"
*Excludes Common Stock issuable upon conversion of 500 shares of Series B
Convertible Redeemable Preferred Stock. Through September 30, 1996, 29 shares
of Series B Convertible Redeemable Preferred Stock had been converted into
203,835 shares of Common Stock.
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth, for the periods and at the dates
indicated, summary historical consolidated financial data of the Company. The
summary consolidated historical financial data has been derived from the
audited consolidated financial statements of the Company for each of the two
years ended March 31, 1996 and the unaudited consolidated financial statements
for the three months ended June 30, 1996 and 1995. These financial statements
and financial data should be read in conjunction with such financial statements
and the notes thereto incorporated by reference into this Prospectus. The
results for the three months ended June 30, 1996, are not necessarily
indicative of the results to be expected for the full year.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
MARCH 31, JUNE 30,
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1996 1995 1996 1995
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(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales..................................... $151,718 $137,044 $39,213 $40,409
Cost of sales............................. $127,540 $112,382 $31,376 $32,428
Gross profit.............................. $24,178 $24,662 $7,837 $7,981
Operating expenses........................ $42,991 $34,219 $7,957 $8,168
Operating loss............................ $(18,813) (a) $(9,557) $(120) $(187)
Other income (expense), net............... $(2,629) $(7,617) (b) $(663) $(156)
Net loss.................................. $(21,442) $(17,174) $(783) $(343)
Net loss per common share................. $(0.61) $(0.55) $(0.02) $(0.01)
Weighted average number of common
shares outstanding....................... 34,910 31,320 40,111 32,975
BALANCE SHEET DATA (END OF PERIOD):
Working capital............................ $22,934 $22,139 $21,604 $23,257
Goodwill, net.............................. 28,554 (a) 35,504 28,258 35,311
Total assets............................... $102,013 $110,297 $105,997 $112,617
Long-term obligations, excluding
current installments and Class Action
Lawsuit settlement obligation............ $6,554 $2,345 $3,968 $2,458
Shareholders' equity....................... $50,026 $63,306 $56,707 $64,432
Common stock outstanding (c)............... 38,663 33,876 42,776 34,571
Preferred stock outstanding (c)............ - -
STATEMENT OF CASH FLOWS DATA:
Net cash used in operating activities...... $(10,589) $(20,609) $(4,604) $(1,635)
Net cash provided by (used in)
investing activities...................... $710 $20,771 $(269) $1,406
Net cash provided by (used in)
financing activities...................... $9,046 $(76) $4,550 $499
</TABLE>
(a) Includes an adjustment (i) to write-down goodwill of $5,699,000, (ii)
expense incurred to consolidate operations totaling $4,100,000, (iii)
changes to reimbursement rates and other matters associated with state
reimbursement programs totaling approximately $12,500,000, and (iv) a
provision for uncollected receivables of $1,700,000.
(b) Includes Class Action settlement and related expenses of $6,764,000.
(c) Series A Convertible Redeemable Preferred Stock outstanding was 210 as of
March 31, 1996 and 20 as of June 30, 1996. 500 shares of Series B
Convertible Redeemable Preferred Stock were issued in July 1996 for net
proceeds of approximately $4,700,000. Through September 30, 1996, 29
shares of Series B Convertible Redeemable Preferred Stock had been
converted into 203,835 shares of Common Stock.
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE OTHER
INFORMATION IN THIS PROSPECTUS AND INFORMATION INCORPORATED HEREIN BY REFERENCE
BEFORE PURCHASING THE SECURITIES OFFERED HEREBY. EXCEPT FOR THE HISTORICAL
INFORMATION CONTAINED HEREIN OR INCORPORATED HEREIN BY REFERENCE, THE
DISCUSSION IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS
AND INCORPORATED BY REFERENCE HEREIN SHOULD BE READ AS BEING APPLICABLE TO ALL
RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN OR ARE INCORPORATED
HEREIN BY REFERENCE INTO THIS PROSPECTUS. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE DISCUSSED HERE OR INCORPORATED HEREIN BY
REFERENCE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE
THOSE DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.
LIMITED OPERATING HISTORY AND OPERATING LOSSES SINCE INCEPTION. The
Company was organized in September 1990, has a limited operating history and
has incurred significant losses since inception. For the fiscal years ended
March 31, 1996 and 1995, the Company had losses of $21,442,000 and $17,174,000,
respectively, including for fiscal 1995 an expense of $6,764,000 relating to
settlement of a class action lawsuit. Omega's net loss in fiscal 1996 was an
$11,032,000 increase over fiscal 1995, excluding the class action lawsuit
settlement and related expenses. The primary reasons for this increase include
the following fourth quarter 1996 charges: (i) the write-down of goodwill
totaling $5,699,000, (ii) expenses incurred to consolidate operations totaling
approximately $4,100,000, (iii) changes in reimbursement rates and other
matters associated with state reimbursement programs totaling approximately
$2,500,000, and (iv) a provision for uncollectible receivables of $1,700,000.
Revenues and margins were also negatively effected in the fourth quarter due to
severe and prolonged winter weather conditions in the eastern United States.
The Company incurred a net loss of $783,000 and $343,000 for the quarters ended
June 30, 1996 and 1995, respectively. The increase was caused by bank charges
resulting from loan agreement modifications and increased interest expense.
Increases in interest rates or amounts borrowed will increase future interest
expense.
Management has and is continuing to take steps to improve margins and
reduce operating expenses. Management has lowered overhead, eliminated
duplicate functions and facilities, disposed of non-core lines of business, and
significantly downsized two units' unprofitable operations. The Company is
currently in the process of aligning operations along functional lines on a
national basis including (i) centralizing purchasing and distribution under one
national information system, (ii) consolidating maintenance services in one
nationally coordinated and directed unit, and (iii) consolidating marketing and
sales activities. There can be no assurance the Company will be profitable.
In connection with its strategy to provide products and services to the
owners and operators of fueling facilities on a national basis, the Company
continually investigates possible acquisition and divestiture opportunities and
expects to continue to complete such transactions in the future. Accordingly,
the Company anticipates that it will continue to incur the costs associated
with these activities such as consulting and legal expenses and general and
administrative expenses. The Company will continue to incur expenses in
connection with completing and integrating the acquired businesses into the
Company. Further, the future amortization of goodwill associated with
completed and future acquisitions, if any, will also have a material adverse
effect on future results of operations. Goodwill amortization resulting from
past acquisitions is approximately $1,600,000 per year at this time.
In March 1996 the Company critically analyzed each acquired entity's
goodwill balance for impairment, including future financial projections. As a
result, a goodwill write-down of $5,699,000 was recorded. During the five
months ended August, 31, 1996, certain entities continued to incur operating
losses and perform at levels lower than the financial projections made in March
1996. Management is continuing to closely monitor the operating performance of
these entities in relation to projections made in March 1996. If
<PAGE>
the results suggest that goodwill impairment has occurred, the Company will
critically analyze and measure the aforementioned goodwill for impairment, and
a significant write-down is possible.
CONSOLIDATION OF OPERATIONS. Management is in the process of
consolidating the operations of the acquired entities along functional lines on
a national basis. In March, 1996 the Company incurred expenses totaling
$4,100,000 related to this consolidation. As management implements the new
functional organization structure, additional functions and facilities may be
eliminated or replaced that would result in additional expenses. The amount
and timing of these additional expenses is not currently known. There can be
no assurance that the consolidation of operations will be successful or, if
completed, that operations will be profitable.
LIQUIDITY. The Company has incurred significant losses since inception
and operations have not generated cash. To meet operating cash needs and
reduce debt the Company sold Common Stock and Preferred Stock in fiscal 1996
for net proceeds of $9,445,000. Through the first five months of fiscal year
1997 the Company received net proceeds of approximately $2,700,000 from the
exercise of unit options and underlying warrants by underwriters and net
proceeds of approximately $4,700,000 from the sale of 500 shares of Series B
Convertible Redeemable Preferred Stock. Continued operating losses will cause
liquidity problems and there can be no assurances that the Company will be able
to generate cash from operations, borrowings, or the sale of additional equity
securities. Further, the Company's liquidity could be adversely affected by
acquisitions which require cash as part of the purchase price.
On September 15, 1995, the Company entered into a Loan Agreement with BNY
Financial Corporation ("BNYFC"). The three-year Loan Agreement provides for a
$10,000,000 term loan and up to a $20,000,000 revolving loan and is secured by
the Company's assets. Proceeds of approximately $17,000,000 from the loans
were used to replace previous lines of credit and pay off the majority of long-
term obligations and obligations under capital leases. Borrowings under the
revolving loan are limited to a percent of eligible assets (as defined in the
Loan Agreement), primarily receivables and inventories. Interest accrues at
the Eurodollar Rate plus 3.25% or at the Alternative Base Rate (as defined in
the Loan Agreement) plus 2%, at the Company's option, and is payable monthly.
As of August 31, 1996, the Company had a borrowing capacity under the revolving
loan of approximately $20,000,000 based on certain asset levels, of which the
Company had borrowed $14,000,000 and the balance of the term loan was
$2,900,000. Under the Loan Agreement, the Company must maintain certain ratios
and certain net income and is prohibited from paying dividends, repurchasing or
redeeming its capital stock, and certain other activities. No assurances can
be given that the Company can satisfy such tests and covenants. In the past,
the Company has not maintained such ratios or net income tests but has obtained
waivers and modifications from BNYFC for additional fees. No assurances can be
given that any waivers or modifications will be granted in the future.
Increases in interest rates will increase the Company's cost of borrowings
under the Loan Agreement and will adversely affect results of operations. The
BNYFC Loan Agreement expires on September 14, 1998. There can be no assurances
that the Company will be able to renew or replace the BNYFC Loan Agreement.
As of August 31, 1996, the Company had receivables and costs and estimated
earnings in excess of billings on uncompleted contracts relating to the Florida
State Reimbursement Program (the "Program") of approximately $8,000,000.
Management expects that receivables and costs and estimated earnings in excess
of billings on uncompleted contracts related to the Program will be collected
from third party funders during the fiscal year 1997. No assurances can be
given that any funder financing can be achieved. Failure to obtain such
financing would adversely impact the Company's liquidity and ability to expand
its operations under other state government reimbursement programs.
In addition, as of August 31, 1996 the Company is responsible for any
shortfalls related to the approximately $16,000,000 of billings to the Program
for services performed by the Company and paid to the Company by the funders.
The shortfall results from deductions for costs which, in the State's opinion,
are not allowable under the reimbursement regulations. Upon such notification,
the funder may appeal and/or require the Company to repurchase the denied
amount. In accordance with certain funder agreements, approximately $2,000,000
of the proceeds have been placed in escrow to reimburse funders for any
shortfalls.
<PAGE>
There can be no assurances that escrowed amounts would be adequate
to cover shortfalls. The Company has recorded an estimated liability for
shortfalls, but actual shortfalls could differ from those estimates.
Omega Environmental Financial Services, Inc., a subsidiary of the Company
("Omega Financial"), facilitates third-party financing primarily for customers
of the Company's operating divisions. In addition to serving as an
intermediary between customers and funding sources, Omega Financial has been
authorized by the Company's Board of Directors to provide up to $2,000,000 of
limited recourse assurances and guarantees to participating financial
institutions. At August 31, 1996, the Company has guaranteed repayment of
certain loans of customers totaling $1,400,000. If a customer whose debt the
Company has guaranteed fails to make payments, the Company would be required to
make the payments which would adversely affect the Company's liquidity and
results of operations.
GOING CONCERN. The report of the Company's independent auditors on the
consolidated financial statements of the Company for the year ended March 31,
1996, contains an explanatory paragraph that states that the Company has
incurred significant losses since inception and operations have not generated
sufficient cash to cover current obligations. These matters raise substantial
doubt about the Company's ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
RISK OF GROWTH THROUGH ACQUISITION. One of the Company's business
strategies is to increase its revenues and marketing capabilities through the
acquisition of regional or local UST installation, removal, distribution,
service, remediation and other businesses. The Company has made sixteen
acquisitions since March 1993, but has made only one minor acquisition since
November 1994. While the Company is continuing to explore acquisitions
candidates, it has no agreements relating to any potential acquisitions. There
is no assurance that the Company will be able to complete any further
acquisitions or, if completed, that such acquisitions will be of the size or in
locations most desirable to implement the Company's overall strategy. Entities
acquired by the Company may have liabilities under contracts performed by them
prior to acquisition or other liabilities including those under environmental
laws and regulations for which the Company may be responsible. Further, no
assurances can be given that the Company can successfully integrate and operate
any and all of the acquired companies profitably.
RELIANCE ON GOVERNMENT REGULATION AND PROGRAMS. Environmental laws and
regulations are, and will continue to be, one of the principal factors
affecting demand for UST installation, removal and remediation and the other
products and services of the types offered by the Company. The Company is
currently offering services in the UST market which is government regulated.
The level of enforcement activities by federal, state and local environmental
protection agencies and changes in laws and regulations may also affect demand
for the Company's services. Any changes in these laws or regulations which
increase compliance standards may require the Company to modify its activities
to meet more stringent regulatory requirements. To the extent that the burdens
of complying with such environmental laws and regulations may be eased, such as
a delay in the 1998 EPA deadline, the demand for the Company's services could
be materially and adversely affected. In addition, the existence of
environmental regulations and the level of enforcement vary by country and will
affect demand for the Company's products and services outside the United
States.
The Company provides environmental engineering and remediation services
for which governmental reimbursement programs are expected to be ultimate
payers. The largest of these programs, funded through petroleum taxes, are in
the States of Florida and Texas. Recently the State of Florida has
restructured the Program to provide a priority for site clean-ups and pre-
approval instead of a first come, first serve reimbursement basis. In
addition, while the program was being restructured, payments were suspended for
several months. The failure to continue these government reimbursement
programs, or changes in these government reimbursement programs, could
adversely effect the Company's operations and liquidity.
POTENTIAL ENVIRONMENTAL LIABILITY AND GOVERNMENT REGULATIONS. The
Company's business exposes it to the risk that harmful substances will escape
into the environment and cause damage or injury to
<PAGE>
others. If the installed UST systems do not function as expected, petroleum
or hazardous materials may enter the ground, and possibly groundwater, or
cause other damage and the Company may be responsible for part or all of the
cost of resolving the damages, including the clean-up of any environmental
contamination. The Company offers, as part of its services, installation,
removal and remediation products and services, the removal and disposal of
leaking USTs, and disposal or remediation of contaminated soil and water.
The Company may be liable for investigation and cleanup costs under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA" or the "Superfund"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), the Oil Pollution Act of 1990 ("OPA") and similar
state and local laws. In addition, the Company may be subject to the
requirements applicable to the generation, transportation and disposal of
hazardous waste.
The Company currently maintains general liability insurance, contractor's
pollution liability insurance and product liability insurance, although no
assurance can be given that such insurance will continue to be available. The
Company believes that its current level of insurance coverage is adequate to
protect it from the type and level of liability exposure the Company can
reasonably expect to encounter during its ordinary course of business.
However, the coverage would most likely be inadequate if a catastrophic event
occurred for which the Company was determined to be liable. As a result, there
is no assurance that such insurance coverage will adequately protect the
Company under all circumstances.
USTs must meet EPA regulations and certain state and local regulations.
Federal UST regulations are promulgated under RCRA and relate to storage of
petroleum products and other hazardous substances under CERCLA. State and
local laws and regulations require that installers, servicers and removers of
USTs be licensed and certified according to applicable regulations. No
assurance can be given that the EPA or state or local laws and regulations will
not be changed, or that any such changes would not have a material adverse
effect on the Company's business.
EMPLOYEE HEALTH AND SAFETY. UST removal, installation and remediation
operations may expose the Company's employees and others to dangerous and
potentially fatal quantities of petroleum or hazardous chemical products, which
may cause cancer and other debilitating diseases. Although the Company takes
precautions to minimize worker exposure, there can be no assurance that the
Company will avoid liability to persons who contract diseases related to such
exposure. Such persons potentially include the Company's employees, persons
occupying or visiting facilities in which petroleum or other chemicals are
being or have been removed or stored, persons in surrounding areas and persons
engaged in transportation and disposal of waste material. In addition, the
Company and its employees are required to meet certain training, health and
safety and licensing requirements under OSHA and other Federal, state and local
laws.
DEPENDENCE ON MANAGEMENT AND QUALIFIED PERSONNEL. The Company has been
and will be dependent for management and operation of the Company by Louis J.
Tedesco, Chairman of the Board of Directors, Chief Executive Officer and
President of the Company. Loss of the services of Mr. Tedesco or other key
managers could adversely affect the Company. The Company's success will also
depend significantly on its ability to obtain and retain management and to
attract and retain additional skilled personnel, including highly trained
estimators, project managers and licensed supervisors. Additionally, the
Company's success is dependent upon maintaining adequate employee relations,
including relations with unions.
The Company has grown primarily by acquisition and has made sixteen
acquisitions since March 1993. The growth of the Company by acquisition and
the need to integrate the businesses of acquired companies into the Company's
standards has placed and will continue to place a significant strain on the
Company's management resources. As the Company grows, the number of employees
with specialized skills may need to be increased. Although the Company has
been preparing for larger scale operations, there can be no assurance that the
company will be able to operate on a substantially larger scale or obtain the
necessary personnel.
FLUCTUATIONS IN OPERATING RESULTS. The Company has expanded by acquiring
entities involved in the installation, removal, distribution, service and
remediation businesses and has accounted for such
<PAGE>
acquisitions using the purchase method of accounting. Accordingly, it has
included the operations of acquirees from the date of their acquisition. As
a result, year-to-year and partial year results have fluctuated and may
continue to fluctuate depending upon the timing of acquisitions, if any.
Quarterly results of operations may fluctuate as a result of adverse winter
weather.
CUSTOMERS. The Company has a large number of customers in the United
States and Mexico. As part of its ordinary course of business, the Company
grants credit to customers based upon an assessment of their payment history
and financial statements. Management has estimated and recorded an allowance
for uncollectible accounts receivable, but the amounts ultimately collected
could differ from estimated amounts.
The Company's customers have in the past and could be in the future
negatively affected by disruption or instability in the world oil supply. This
could result in the slowdown or stoppage of projects in the Company's markets.
INVENTORIES. The Company maintains inventories for sales to third parties
and use in its installation and service businesses. The technology used in
such equipment is becoming more complex and is continually changing.
Therefore, portions of the Company's inventories could become obsolete.
Management has estimated and recorded an allowance for obsolete and slow moving
inventories, but actual amounts could differ from those estimates.
VENDORS. While the Company acquires equipment and parts from many
sources, a major manufacturer of fuel dispensing equipment, Gilbarco Inc., a
unit of General Electric PLC, canceled its local distributor arrangement with
two of the Company's units. The Company can obtain equipment and parts from
other sources. The Company has filed a lawsuit against Gilbarco and others
alleging violation of the antitrust and other laws and has won a $27 million
judgment against Gilbarco, which has appealed such judgment. The Company
intends to pursue its legal remedies through the appeals process, the cost of
which may adversely effect the results of operations. The Company will not
recognize the award in its consolidated financial statements until it is
received or assured. There can be no assurances that the Company will be
successful in this appeal or that any such judgment will be collected.
The Company maintains distributorship agreements with other manufacturers
of fuel dispensing equipment and supplies. There can be no assurances that the
Company can maintain these distributorship agreements and, if any of such
agreements are canceled, such cancellation may adversely affect the results of
operations.
COMPETITION. The UST industry is highly competitive, comprised of
numerous petroleum product-related construction firms, UST equipment
distributors, and service and engineering firms. The Company believes that
most of such firms have only a local or regional presence. The remediation
industry is highly competitive and certain competitors have resources greater
than the Company and offer their services on a national and international
scale. The Company also believes that additional firms may enter the market,
in response to EPA, state and local regulations and that added competition has
adversely affected and may continue to adversely affect its operating profit
margins. Competition is primarily based on price, service, reliability and
reputation.
RISKS OF CONSTRUCTION BUSINESS AND SEASONALITY. The Company is subject to
the risks of the construction business including the risks of delay because of
weather, such as 1993-1994 and 1995-1996 prolonged adverse winter weather on
the East Coast, availability of skilled workers and materials and other similar
risks that result from the acts of its subcontractors or other contractors at a
work site. Commercial construction projects, as well as federal, state and
municipal projects, often require contractors to post both performance and
payment bonds at the time of execution of a contract. Performance bonds
guarantee that the project will be completed, and payment bonds guarantee that
subcontractors and vendors will be paid for labor, equipment and other
purchases. Bonds typically cost between 1 1/2% and 2 1/2% of the cost of the
project. Contractors without adequate bonding capabilities may be ineligible
to bid or negotiate on many projects. Although the Company currently has a
surety program with a major underwriter for this purpose,
<PAGE>
there can be no assurance that this program will continue or that the Company
will be able to maintain adequate bonding capacity.
Certain of the Company's construction contracts are on a fixed price
basis. Cost over-runs, due to subsequent price increases, unanticipated
problems, inefficient project management, inaccurate estimation of labor or
material costs or disputes over the terms and specifications of contracted
performance, could have a material adverse effect on the Company and its
operations. The Company anticipates that sales from construction and
remediation services performed primarily outdoors will experience some
seasonality based on the effects of weather conditions, and that these effects
will vary depending on the particular geographic area where the construction or
remediation is performed.
BACKLOG. In general, fixed price fueling facility related contracts are
completed within a few months and thus this firm backlog does not meaningfully
reflect future sales levels. The Company also has time and material contracts,
most of which involve site assessment and remediation, including contracts in
which state government petroleum clean-up reimbursement programs will pay for
the cost of such clean-up. Under the government reimbursement programs, the
Company performs environmental clean-up services for a client with the
understanding that the government reimbursement program will pay for the
majority of clean-up costs, and not the client. The Company has a substantial
number of contracts to be completed in the next several years, which contracts
do not specify anticipated costs of the clean-up and the costs of completing
the work are not determined until after the contract is entered into and site
assessment work is substantially complete. Further, certain of such contracts
may be terminated by the customer. In some of these sites, the client may pay
for certain upgrading of the petroleum distribution system when the clean-up is
in process. The Company is completing such contracts in the ordinary course of
business. There is a substantial lag time under these state programs before
payment is received.
FOREIGN OPERATIONS. The Company has operations in Mexico, Argentina and
Spain and may expand such operations to other countries. Such operations are
subject to the customary risks of doing business abroad, including fluctuations
in the value of currencies, inflation, taxes or tax policies, currency export
controls, imported duties, quotas, work stoppage and political instability, and
additional or different environmental regulations. These risks may adversely
affect the Company's operations in Mexico, Argentina and Spain.
POSSIBLE VOLATILITY OF SHARE PRICE. There has been a history of
volatility in the market prices for securities of growth companies including
the Company. Factors such as announcements of acquisitions, operating results
and government regulatory action, could have a significant impact on the future
market price of the Common Stock. In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of particular
companies. These fluctuations, as well as general economic and market
conditions, may adversely affect the market price of the Common Stock.
BLANK CHECK PREFERRED STOCK. The Company's Board of Directors has the
authority to issue up to 5,000,000 shares of Preferred Stock and to determine
the price, rights, preferences and privileges of those shares without any
further vote or action by the stockholders. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any Preferred Stock that may be issued in the future. Except
for the outstanding Series B Convertible Redeemable Preferred Stock, the
Company has no present intention of issuing additional shares of Preferred
Stock. The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could,
among other things, have the effect on making it more difficult for a third
party to acquire a majority of the outstanding voting stock of the Company.
ANTI-TAKEOVER EFFECT OF DELAWARE LAW. The Company is subject to the anti-
takeover provisions of Section 203 of the Delaware General Corporation Law,
which prohibits the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 could have the effect of delaying or
<PAGE>
preventing a change of control of the Company. The Company may be subject to
similar provisions of the Washington Business Corporation Act.
LITIGATION. The Company from time to time is subject to ordinary routine
litigation relating to its operations, some of which is covered by insurance
and some of which may not be. The Company may have liability under
environmental laws for work performed by it or its acquired entities, including
cleanup liability under the Super Fund laws or similar state and local laws.
At the current time the Company does not believe that any litigation it is
involved in would result in a material adverse effect on the Company's
financial position. However, given the nature of environmental lawsuits the
Company is or could be subject to, no assurance can be given that any such
lawsuits may not result, individually or in the aggregate, in a material
judgment against the Company. As of the date hereof, the Company is not
subject to any environmental lawsuits brought by any governmental agency.
Also, see Vendors on page 9.
<PAGE>
SELLING STOCKHOLDERS
The following table shows for the Selling Stockholders, (i) the number and
percentage of Common Stock of the Company beneficially owned by them as of
September 15, 1996 and (ii) the number of shares covered by this Prospectus.
Number of
Number of Shares
Shares Covered Amount
Beneficially by This After
Selling Stockholder Owned* Prospectus Offering**
- -------------------------------- -------------- ----------- ----------
Gary Beal (2) 27 27 -0-
Steve Beirl (2) 1,501 1,501 -0-
Kenneth Blandford (2) 5 5 -0-
Michael & Paulette Brody (2) 5 5 -0-
Shirley Campana (2) 589 589 -0-
Alan Chilcoat (2) 35 35 -0-
Dominick & Dominick,
Incorporated (6) 150,000 150,000 -0-
Norman & Dorothy Eder (2) 5 5 -0-
Donald Ray Elliott (2) 5 5 -0-
Kent Ellsworth (2) 1,966 1,966 -0-
Anita Engstrom (2) 5 5 -0-
Janice Lynn Engstrom (2) 5 5 -0-
Patricia Engstrom (2) 5 5 -0-
Merle Ferris (2) 5 5 -0-
Salvatore Gaglio (2) 2,049 2,049 -0-
Theodore Mitchell Gurr (1) 1,996,199 1,273,750 -0-
Lee Hanna (2) 856 856 -0-
Thomas Huntoon (2) 561 561 -0-
Dennis Kuhr (2) 1,384 1,384 -0-
Robert Larsen (2) 415 415 -0-
Scott Larsen (2) 82,857 16,584 -0-
David & Patricia Manigold (2) 27 27 -0-
William D. Marshall (5) 13,186 13,186 -0-
Robert Massey (2) 5 5 -0-
Greg Maupin (2) 1,966 1,966 -0-
Steve Maupin (2) 589 589 -0-
Donald W. May, Jr. (4) 40,478 28,356 -0-
Suzanne K. Painter (3) 19,933 5,466 -0-
David V. Parks (3) 19,933 5,466 -0-
Roy H. Parks, Jr. (3) 19,933 5,466 -0-
Norman & Annalee Parrish (2) 16 16 -0-
<PAGE>
Number of
Number of Shares
Shares Covered Amount
Beneficially by This After
Selling Stockholder Owned* Prospectus Offering**
- -------------------------------- -------------- ----------- ----------
Stephen Pegler (2) 159,011 28,082 -0-
Joseph Pitt (2) 5 5 -0-
R. Michael Pitt (2) 5 5 -0-
Liz Robbins (6) 537 537 -0-
South Coast Communications (6) 2,254 2,254 -0-
Joy Stillman (2) 385 385 -0-
The Anna T. Mercede Martial Trust (2) 289 289 -0-
The Martial Trust Election (2) 229 229 -0-
Konnie J. Trace (3) 19,933 5,465 -0-
Triad Capital Partners (2) 2,757 2,757 -0-
Carl G. Walko (5) 13,187 13,187 -0-
Kenneth Woodruff (2) 5 5 -0-
- ---------------
* No Selling Stockholder in the above table owns over 1% of the outstanding
Common Stock, except Theodore Mitchell Gurr (4%).
** "Amount After Offering" assumes the sale of all shares for each individual
covered by this Prospectus and other Prospectuses of the Company.
(1) A former officer and director of Gurr Omega, Inc. and shareholder of the
predecessor which the Company acquired. Gurr Omega, Inc. was merged into
the Company in September 1995. Mr. Gurr is currently President of the
Environmental Services Division of the Company.
(2) Former shareholders of the predecessor of Silicate Omega, which was merged
into the Company in September, 1995.
(3) Certain officers, directors and owners of Parks Family Investment
Corporation, the predecessor to Parks Omega. David V. Parks and Roy H.
Parks, Jr. were officers and directors of Parks Omega, which was merged
into the Company in September, 1995.
(4) Former shareholder of the predecessor of SST Omega, which was merged into
the Company in September, 1995.
(5) Former shareholder of Life Cycle Services, Inc. which was acquired by the
Company in April, 1996.
(6) Consultant that provided services to the Company.
The above Selling Stockholder's shares are included in this Prospectus
pursuant to the acquisition agreements in which the Company acquired certain
assets and businesses or pursuant to other arrangements with the Company.
Information set forth in the tables regarding the securities owned by each
Selling Stockholder is provided to the best knowledge of the Company based on
information furnished to the Company by the respective Selling Stockholder
and/or available to the Company through its stock transfer records.
<PAGE>
PLAN OF DISTRIBUTION
The securities offered hereby may be sold by the Selling Stockholders or by
pledgees, donees, transferees or other successors-in-interest. Such sales may
be made in the over-the-counter market, in privately negotiated transactions,
or otherwise, at prices and at terms then prevailing, at prices related to the
then current 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 trans
action; (b) a 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 a Selling Stockholder may arrange for other
brokers or dealers to participate. Any such brokers or dealers will receive
commissions or discounts from a Selling Stockholder 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 commission
paid to the broker by a Selling Stockholder.
The securities covered by this Prospectus may be sold under Rule 144
instead of under this Prospectus. The Company will not receive any portion
of the proceeds of the securities sold by the Selling Stockholders. There is
no assurance that the Selling Stockholders will sell any or all of the
securities offered hereby.
The Selling Stockholders have been advised that during the time each is
engaged in distribution of the securities covered by this Prospectus, each must
comply with Rules 10b-5 and 10b-6 under the Securities Exchange Act of 1934, as
amended, and pursuant thereto: (i) shall not engage in any stabilization
activity in connection with the Company's securities; (ii) shall furnish each
broker through which securities covered by this Prospectus may be offered the
number of copies of this Prospectus which are required by each broker; and
(iii) shall 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 Securities Exchange Act of 1934, as amended. Any Selling
Stockholders who may be "affiliated purchasers" of the Company as defined in
Rule 10b-6, have been further advised that pursuant to Securities 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.
DESCRIPTION OF SECURITIES
GENERAL. The Company is authorized to issue 60,000,000 shares of Common
Stock, $0.0025 par value, and 5,000,000 shares of Preferred Stock, $0.0025 par
value. The Board of Directors and stockholders have recently approved an
amendment to increase the authorized shares of Common Stock to 100,000,000. As
of August 31, 1996, 43,379,780 shares of Common Stock and 500 shares of Series
B Convertible Redeemable Preferred Stock were outstanding .
COMMON STOCK. The holders of Common Stock are entitled to one vote for
each share held of record on all matters to be voted on by shareholders, and
are not entitled to cumulate their votes in the election of directors. The
holders of Common Stock are entitled to receive dividends when and if
declared by the Board of Directors out of funds legally available. In the
event of liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to share ratably in all assets remaining
available for distribution to them after payment of liabilities and after
provision has been made for each class of stock, if any, having preference
over the Common Stock. Holders of shares of Common Stock, as such, have no
conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to the Common Stock.
PREFERRED STOCK. The Company is authorized to issue Preferred Stock with
such designations, rights and preferences as may be determined from time to
time by the Board of Directors. Accordingly, the Board of Directors is
empowered, without shareholder approval, to issue preferred stock with
dividend,
<PAGE>
liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of the Company's Common
Stock. In the event of issuance, the Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. The Company does not currently intend to
issue any additional shares of its Preferred Stock.
In December, 1995, the Company sold 500 shares of Series A Convertible
Redeemable Preferred Stock for net proceeds of $4,635,000. As of August 31,
1996, all Series A Convertible Redeemable Preferred Stock had been converted
into 2,553,693 shares of Common Stock.
The Company has 500 shares of Series B Convertible Redeemable Preferred
Stock ("Series B Preferred Stock") outstanding as of September 15, 1996.
Holders of Series B Preferred Stock are not entitled to receive any dividends
and have the right to vote on all matters on which the holders of Common Stock
shall have the right to vote, and each share of Series B Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible, with fractions rounded up to next full vote.
Holders of Series B Preferred Stock are not entitled to any liquidation
preference upon any voluntary liquidation, dissolution or winding up of the
Company. The Company shall not amend alter or repeal any of the provisions of
its Certificate of Incorporation or bylaws so as to affect adversely the
powers, preferences, qualifications, limitations or rights of the holders of
the Series B Preferred Stock.
The holders of Series B Preferred Stock are entitled to convert the shares
of Series B Preferred Stock at the Conversion Price into fully paid and non
assessable shares of the Company's Common Stock. The Conversion Price is equal
to the lower of (i) $1.83661 (85% of the average closing bid price of the
Common Stock calculated over the seven trading-day period ending on the day
prior to the date of the subscriptions for the Series B Preferred Stock) or
(ii) 85% of the average closing bid price of the Common Stock calculated over
the seven trading-day period immediately preceding the day on which each
written notice of a conversion is submitted to the Company. The number of
shares to be received upon conversion shall be determined by dividing the
purchase price per share of Series B Preferred Stock of $10,000 by the
Conversion Price.
The Company has the right, upon ten days written notice, to redeem all
outstanding shares of Series B Preferred Stock for $12,200 cash per share of
Series B Preferred Stock. Notwithstanding the foregoing, holders of Series B
Preferred Stock may continue to submit notices of conversion until the
termination of the relevant notice period and will receive Conversion Shares
rather than cash if they submit such notices prior to the expiration of said
notice period.
All unconverted Series B Preferred Stock will be mandatorily redeemable by
the Company for $12,200 cash per share of Series B Preferred Stock in the event
that conversion notices are submitted which, if accepted, would (i) otherwise
require the Company to issue Common Stock to the holders in an amount which
exceeds or which has voting power which exceeds nineteen and one-half percent
(19 1/2%) of the number of shares of Common Stock of the Company outstanding
immediately prior to the issuance of the Series B Preferred Stock, or (ii)
result in the Common Stock in excess of the number of shares of Common Stock
authorized in the Certificate of Incorporation of the Company (as amended).
All outstanding shares of Series B Preferred Stock will automatically
convert into Common Stock at the Conversion Price on July 31, 1997.
The Conversion Price is subject to adjustment upon the occurrence of
certain events, including: the issuance of capital stock of the Company or
rights to purchase stock or other securities, as a dividend or distribution
on any shares of capital stock of the Company; subdivisions, combinations and
reclassifications of the Common Stock; the issuance to all holders of Common
Stock of certain rights or warrants entitling them to subscribe for or
purchase Common Stock at less than the current market price (as calculated in
the Certificate of Designation of the Series B Preferred Stock); and the
distribu tion to all holders of Common Stock of evidence of indebtedness,
cash (excluding ordinary cash dividends from retained earnings), or assets or
other rights or warrants to subscribe for or purchase any security.
<PAGE>
LEGAL OPINION
The validity of the securities offered hereby will be passed upon for the
Company by Jeffer, Mangels, Butler & Marmaro LLP, Los Angeles, California.
EXPERTS
The consolidated financial statements of Omega Environmental, Inc. as of
March 31, 1996 and 1995, and for each of the years in the three-year period
ended March 31, 1996, incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP, covering the March 31, 1996 consolidated financial
statements contains an explanatory paragraph that states that the Company has
incurred significant losses since inception and operations have not generated
sufficient cash to cover current obligations. These matters raise substantial
doubt about the Company's ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
<PAGE>
-----------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY.THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
Page
----
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.............................................................2
AVAILABLE INFORMATION........................................................2
PROSPECTUS SUMMARY...........................................................3
RISK FACTORS.................................................................5
SELLING STOCKHOLDERS........................................................12
PLAN OF DISTRIBUTION........................................................14
DESCRIPTION OF SECURITIES...................................................14
LEGAL OPINION...............................................................16
EXPERTS.....................................................................16
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OMEGA
ENVIRONMENTAL, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
October , 1996
--
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses, in connection with
the offering described in this Registration Statement.
Total
--------
SEC Filing Fee................................... $ 910
Reproduction*.................................... 1,000
Accounting Fees and Expenses*.................... 4,000
Legal Fees and Expenses*......................... 13,000
Miscellaneous*................................... 1,090
-------------
Total............................................ $ 20,000
-------------
-------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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 fees. The Company's Certificate of Incorporation eliminates
director's liability to shareholders or the Company for monetary damages
arising out of certain breaches by the directors of their fiduciary duty of
care. Finally, Article Ninth of the Registrant's Certificate of Incorporation
and Article III, Section 13, of the Registrant's By-Laws provides for
indemnification of the 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
Exhibit
Number
- -------
3(i) Amended and Restated Certificate of Incorporation of the
Registrant, dated as of July 30, 1996 (2)
3(ii) Bylaws of the Registrant dated as of December 28, 1989, as
amended March 26, 1992 (3)
4 See Exhibits 3(i) and (ii).
5 Opinion of Jeffer, Mangels, Butler & Marmaro LLP (1)
15 Letter of KPMG Peat Marwick LLP (Included on Page II-6) (1)
23.1 Consent of KPMG Peat Marwick LLP (Included on Page II-4) (1)
23.2 Consent of Jeffer, Mangels, Butler & Marmaro LLP (See Exhibit 5)
24 Power of Attorney (See Page II-3)
- -------------------
(1) Filed herewith.
(2) Previously filed with and incorporated herein by reference to the
Registrant's Form 10-Q for the fiscal quarter ended June 30, 1996.
(3) Previously filed and incorporated herein by reference to the
Registrant's Form 10-Q, as amended, for the fiscal quarter ended
December 31, 1995.
<PAGE>
ITEM 28. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, 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% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-8, Form S-3 or Form F-3,
and 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
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel 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 the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf of the undersigned, thereunto duly
authorized, in the City of Bothell, State of Washington, on the 2nd day of
October 1996.
OMEGA ENVIRONMENTAL, INC.
By: /s/ LOUIS J. TEDESCO
--------------------------------
LOUIS J. TEDESCO
Chairman of the Board of Directors, Chief
Executive Officer and President
POWER OF ATTORNEY
Each person whose individual signature appears below hereby constitutes
and appoints Louis J. Tedesco and Dan E. Steigerwald, or either of them, as his
true and lawful attorney(s)-in-fact 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.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------- --------------------- ---------------
/s/ Louis J. Tedesco
- -------------------------
LOUIS J. TEDESCO Chairman of the Board October 2, 1996
of Directors, Chief
Executive Officer,
President and
Director (Principal
Executive Officer)
/s/ Dan E. Steigerwald
- -------------------------
DAN E. STEIGERWALD Chief Financial October 2, 1996
Office (Principal
Financial Officer)
/s/ Bradley S. Powell
- -------------------------
BRADLEY S. POWELL Vice President and October 2, 1996
Corporate Controller
(Chief Accounting
Officer)
/s/ Leo L. Azure, Jr.
- -------------------------
LEO L. AZURE, JR. Director October 2, 1996
/s/ Edgar S. Brower
- -------------------------
EDGAR S. BROWER Director October 2, 1996
/s/ Edward J. O'Sullivan
- -------------------------
EDWARD J. O'SULLIVAN Director October 2, 1996
/s/ Douglas R. Rogers
- -------------------------
DOUGLAS R. ROGERS Director October 2, 1996
/s/ Steve Sarich, Jr.
- -------------------------
STEVE SARICH, JR. Director October 2, 1996
<PAGE>
Exhibit 5
JEFFER, MANGELS, BUTLER & MARMARO LLP
A Limited Liability Partnership Including Professional Corporations
ATTORNEYS at LAW
Tenth Floor
2121 Avenue of the Stars
Los Angeles, California 90067-5010
Telephone (310) 203-8080
Facsimile (310) 203-0567
October 1, 1996
55776-0009
Omega Environmental, Inc.
P.O. Box 30050
Bothell, Washington 98041-3005
RE: OMEGA ENVIRONMENTAL, INC.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
Omega Environmental, Inc., a Delaware corporation (the "Company"), proposes
to file a Form S-3 Registration Statement (the "Registration Statement") for the
sale of 1,563,500 shares of the Company's Common Stock, $0.0025 par value (the
"Shares") by certain selling stockholders of the Company identified in the
Registration Statement, including 150,000 shares underlying.
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 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,
certified by the Delaware Secretary of State on December 17, 1993 and telephonic
update on January 31 1995;
2. By-Laws of the Company, as amended to date, certified by the
Secretary of the Company on January 31, 1995;
3. Various resolutions adopted by the Board of Directors of the
Company authorizing the issuance of Shares;
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;
5. 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 on and subject to the foregoing, it is our opinion that the Shares in
the hands of the Selling
<PAGE>
Shareholders are legally-issued, fully-paid and nonassessable shares of common
stock of the Company. We are not opining as to the ownership of the Shares by
the Selling Shareholders.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement; to the filing of this opinion in connection with such
filings or 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 state 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 opinions 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,
/s/ JEFFER, MANGELS, BUTLER & MARMARO LLP
<PAGE>
Exhibit 15
Omega Environmental, Inc.
Bothell, Washington
Re: Registration Statement No. 333-
--------
Ladies and Gentlemen:
With respect to the subject registration statement, we acknowledge our awareness
of the use therein of our report dated August 13, 1996 related to our review of
interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Seattle, Washington
October 1, 1996
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Omega Environmental, Inc.:
We consent to the use of our report dated May 31, 1996, except as to notes 2 and
5(d), which are as of June 26, 1996 on the consolidated financial statements of
Omega Environmental, Inc. and subsidiaries as of March 31, 1996 and 1995, and
for each of the years in the three-year period ended March 31, 1996,
incorporated herein by reference and to the reference to our firm under the
heading "Experts" in the prospectus.
Our report dated May 31, 1996, except as to notes 2 and 5(d), which are as of
June 26, 1996, on the consolidated financial statements of Omega Environmental,
Inc. and subsidiaries as of and for the year ended March 31, 1996, contains an
explanatory paragraph that states that the Company has incurred significant
losses since inception and operations have not generated sufficient cash to
cover current obligations. These matters raise substantial doubt about the
Company's ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.
/s/ KPMG Peat Marwick LLP
Seattle, Washington
October 1, 1996
