<PAGE>
As filed with the Securities and Exchange Commission on December 23, 1997
File No. 333-38201
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
TOPRO, INC.
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(Name of Registrant as specified in its charter)
COLORADO 84-1042227
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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<S> <C>
John Jenkins, President
Topro, Inc.
2525 W. Evans Avenue 2525 W. Evans Avenue
Denver, Colorado 80219 Denver, Colorado 80219
(303) 935-1221 (303) 935-1221
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(Address, including zip code, and telephone (Name, address, including zip code
number, including area code, of and telephone number, including area
Registrant's principal executive offices) code, of agent for service)
</TABLE>
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It is requested that copies of all correspondence be sent to: Donna A. Key,
Esq., Key & Mehringer, P.C., 555 Seventeenth Street, Suite 3405, Denver,
Colorado 80202, telephone number (303) 295-2300, facsimile number (303)
296-1645.
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES 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
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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. ______
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, as amended, or until the registration statement becomes
effective on such date as the Securities and Exchange Commission acting pursuant
to said Section 8(a) may determine.
<PAGE>
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CALCULATION OF REGISTRATION FEE
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Title of each class of Amount to Proposed maximum Proposed maximum Amount of
securities to be registered(1) be registered(2) offering price per share(3) aggregate offering price(3) registration fee(3)
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<S> <C> <C> <C> <C>
Common Stock, $.0001 par 213,263 Shares $5.3125 $ 1,132,960 $ 343
value (4)
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Common Stock issuable upon 1,333,340 Shares $5.3125 $ 7,083,369 $2,146
Preferred Stock Conversion
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Common Stock issuable upon 868,333 Shares $5.3125 $ 4,613,019 $1,398
exercise of Warrants & Options
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Total 2,414,936 Shares $5.3125 $12,829,348 $3,887(5)
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SUPPLEMENTAL FEE TABLE(6)
CALCULATION OF REGISTRATION FEE
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Title of each class of Amount to Proposed maximum Proposed maximum Amount of
securities to be registered(1) be registered(2) offering price per share(7) aggregate offering price(7) registration fee(7)
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<S> <C> <C> <C> <C>
Common Stock, $.0001 par 955,000 Shares $6.25 $ 5,968,750 $1,809
value (4)
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Common Stock issuable upon 611,666 Shares $6.25 $ 3,822,913 $1,158
exercise of Warrants & Options
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Total 1,566,666 Shares $6.25 $9,791,663 $2,967(8)
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</TABLE>
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(1) For a description of the various securities referred to herein and the
transactions in which they were issued, SEE "Description of Securities -
Securities Registered Hereby"
(2) Pursuant to Rule 416, there also are being registered such additional
shares of Common Stock as may become issuable as a result of the
anti-dilution provisions of outstanding securities.
(3) Proposed maximum offering price and registration fee is based on the
closing sale price ($5.3125) reported by Nasdaq on October 13, 1997 (a date
within five business days prior to the initial filing hereof) pursuant to
Rule 457(c).
(4) Represents shares outstanding in the hands of Selling Securityholders.
(5) Previously paid.
(6) For purposes of calculating registration fee for additional securities
registered in Amendment No. 1.
(7) Proposed maximum offering price and registration fee is based on the
closing sale price ($6.25) reported by Nasdaq on December 8, 1997 (a
date within five business days prior to the filing of an amendment
registering additional securities) pursuant to Rule 457(c).
(8) Paid with Amendment No. 1.
<PAGE>
TOPRO, INC.
CROSS REFERENCE SHEET
FORM S-3 SECTIONS IN PROSPECTUS
ITEM NO. CAPTION OR REGISTRATION STATEMENT
PART I INFORMATION REQUIRED IN PROSPECTUS
1 Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus . . . . . . . . Outside Front Cover Page
2 Inside Front and Outside Back
Cover Pages of Prospectus . . . . . Inside Front Cover Pages;
Table of Contents
3 Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges . . . . . . . . . . . . . . Risk Factors; Prospectus
Summary
4 Use of Proceeds . . . . . . . . . . Prospectus Summary; Use of
Proceeds
5 Determination of Offering Price . . Plan of Distribution
6 Dilution . . . . . . . . . . . . . Not Applicable
7 Selling Security Holders . . . . . Selling Shareholders
8 Plan of Distribution . . . . . . . Plan of Distribution
9 Description of Securities to be
Registered . . . . . . . . . . . . Description of Securities
10 Interest of Named Experts and
Counsel . . . . . . . . . . . . . . Not Applicable
11 Material Changes . . . . . . . . . Prospectus Summary - The
Company and Recent
Developments
12 Incorporation of Certain
Information by Reference. . . . . . Documents Incorporated by
Reference
13 Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities . . . . . . . . . . Plan of Distribution -
Indemnification
PART II INFORMATION NOT REQUIRED IN
PROSPECTUS
14 Other Expenses of Issuance and
Distribution . . . . . . . . . . . Other Expenses of Issuance
and Distribution
15 Indemnification of Directors and
Officers . . . . . . . . . . . . . Indemnification of Directors
and Officers
16 Exhibits . . . . . . . . . . . . . Exhibits
17 Undertakings . . . . . . . . . . . Undertakings
<PAGE>
SUBJECT TO COMPLETION - PRELIMINARY PROSPECTUS DATED DECEMBER 23, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
TOPRO, INC.
1,168,263 OUTSTANDING SHARES OF COMMON STOCK OFFERED BY SELLING SHAREHOLDERS
2,813,339 SHARES OF COMMON STOCK TO BE ISSUED TO AND OFFERED BY
SELLING SHAREHOLDERS
An aggregate of 3,981,602 shares (the "Shares") of $.0001 par value
Common Stock (the "Common Stock") of Topro, Inc. ("Topro" or the "Company")
may be offered by certain shareholders (the "Selling Shareholders") from time
to time in the public market. All proceeds received from the sale of the
Shares offered by the Selling Shareholders will accrue to the benefit of the
Selling Shareholders and not to the Company. Up to 2,813,339 of the Shares
which may be offered by the Selling Shareholders are not outstanding on the
date of this Prospectus, but may be issued by the Company after the date of
this Prospectus upon exercise of outstanding warrants or options or upon the
conversion of Series A Convertible Preferred Stock held by Selling
Shareholders. These Shares may be resold in the public market by the Selling
Shareholders. The Company will receive the exercise or conversion price paid
for issuance of those Shares; however, any difference between that price and
the price at which the Shares are sold in the market by the Selling
Shareholders will accrue to the benefit of the Selling Shareholders. Sales
of any of these previously restricted Shares into the public market could
impact the market adversely so long as this Offering continues. SEE "Risk
Factors."
The Common Stock is traded in the over-the-counter market and quoted on
the National Association of Securities Dealers Automated Quotation System
("Nasdaq") Small-Cap Market under the symbol "TPRO." On December 22, 1997,
the closing sale price of the Common Stock as reported by Nasdaq was $6.50.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" ON PAGES FIVE THROUGH NINE FOR DISCUSSION OF
CERTAIN MATERIAL RISKS IN CONNECTION WITH THE COMPANY WHICH PROSPECTIVE
INVESTORS SHOULD CONSIDER PRIOR TO PURCHASING THE SECURITIES OFFERED HEREBY.
The Shares will be offered by the Selling Shareholders through dealers or
brokers in the over-the-counter market. The Shares may also be sold in
privately negotiated transactions. Sales through dealers or brokers are
expected to be made with customary commissions being paid by the Selling
Shareholders. Payments to persons assisting the Selling Shareholders with
respect to privately negotiated transactions will be negotiated on a
transaction-by-transaction basis. The Selling Shareholders have advised the
Company that prior to the date of this Prospectus they have made no
agreements or arrangements with any underwriters, brokers or dealers
regarding the sale of the Shares. SEE "Plan of Distribution." Any
commissions and/or discounts on the sale of Shares offered by the Selling
Shareholders will be paid by the Selling Shareholders, and all other expenses
related to the filing of the registration statement to which this offering
relates are being paid by the Company.
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 OFFENSE.
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UNDERWRITING DISCOUNTS PROCEEDS TO SELLING
PRICE TO PUBLIC(1) AND COMMISSIONS(2) SHAREHOLDERS(3)
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<S> <C> <C> <C>
Per Share ................... $ 6.50 $ .52 $ 5.98
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Total ....................... $25,880,413.00 $2,070,433.04 $23,809,979.96
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</TABLE>
(1) The Price per Share represents the closing sale price as reported by Nasdaq
on December 22, 1997. These Shares will be offered from time to time by the
Selling Shareholders at market prices by the Selling Shareholders after
exercise of outstanding options or warrants or conversion of the Series A
Convertible Preferred Stock. SEE "Description of Securities."
(2) For purposes of this table, comissions payable on sales by Selling
Shareholders have been estimated at 8%.
(3) The Company is obligated to pay all expenses of registration, including
legal and accounting fees, filing fees and printing expenses, estimated to
total $30,000. Selling Shareholders will pay fees of separate counsel, if
any, retained to assist with the registration. The Company is not aware of
separate counsel retained by any Selling Shareholders. SEE "Plan of
Distribution."
THE DATE OF THIS PROSPECTUS IS _______, 1997.
<PAGE>
AVAILABLE INFORMATION; DOCUMENTS INCORPORATED BY REFERENCE
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("the 1934 Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The
Company's Common Stock and Redeemable Common Stock Purchase Warrants are
quoted on the Nasdaq Small-Cap Market and, therefore, copies of such
documents and other information are provided to the National Association of
Securities Dealers, Inc. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by
the Commission at its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: in Chicago, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and in New York, 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such materials can be obtained at prescribed rates
by written request addressed to the Commission, Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, copies of such
documents and other information are provided to Nasdaq and can be inspected
at the Nasdaq offices maintained at the National Association of Securities
Dealers, Inc., 1735 "K" Street, Washington, D.C. 20549. The Commission
maintains a Web site that contains reports, proxy and information statements
and other information regarding the Company and the address of such Web site
is (http://www.sec.gov).
The Company provides annual reports, including audited financial
statements, to its shareholders on request and as required under the 1934 Act.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended, with respect to the Common Stock offered hereby. As permitted by
the rules and regulations of the Commission, this Prospectus does not contain
all of the information set forth in the Registration Statement and the
exhibits thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement,
including the exhibits filed or incorporated as a part thereof, copies of
which can be inspected at, or obtained at prescribed rates from, the Public
Reference Section of the Commission at the address set forth above.
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference: (1) Annual Report on Form
10-KSB for the fiscal year ended June 30, 1997 filed with the Commission on
October 10, 1997 as amended by Form 10-KSB/A No. 1 and No. 2, filed with the
Commission on October 27, 1997 and December 9, 1997, respectively; (2) Current
Report on Form 8-K dated December 31, 1996 filed with the Commission on
January 15, 1997, as amended by Form 8-K/A No. 1 filed on February 7, 1997,
Form 8-K/A No. 2 filed on February 13, 1997, Form 8-K/A No. 3 filed on
February 28, 1997, Form 8-K/A No. 4 filed on March 5, 1997, which includes
audited year end and unaudited interim financial statements of All-Control
Systems, Inc., and pro forma financial information reflecting the Company's
acquisition of this entity; (3) Current Report on Form 8-K dated October 16,
1997 filed with the Commission on October 16, 1997; (4) Current Report on Form
8-K dated November 3, 1997, filed with the Commission on November 4, 1997; (5)
Quarterly Report on Form 10-QSB for the quarter ended September 30, 1997,
filed with the Commission on November 14, 1997; (6) Current Report on Form 8-K
dated November 21, 1997, filed with the Commission on December 2, 1997, as
amended by Form 8-K/A No. 1 filed with the Commission on December 11, 1997;
(7) Current Report on Form 8-K dated December 19, 1997, filed with the
Commission on December 19, 1997; (8) Definitive Proxy Materials for the Annual
Meeting of Shareholders, filed with the Commission on December 22, 1997; (9)
all other documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the 1934 Act after the date of the initial filing of this
registration statement and prior to effectiveness of this registration
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<PAGE>
statement; and (10) all other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date hereof and
prior to the termination of the offering of the Shares, which documents shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of filing such documents. Any statement contained herein or in any
documents incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that statements contained herein, or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain without charge,
upon written or oral request, a copy of any and all of the documents
incorporated by reference herein (not including exhibits to those documents,
unless such exhibits are specifically incorporated by reference into the
information that the Prospectus incorporates). Requests for such documents
should be directed to Shareholder Relations, Topro, Inc., 2525 W. Evans Ave.,
Denver, CO 80219, telephone (303)935-1221.
FORWARD-LOOKING STATEMENTS
Statements made in this Prospectus, including statements contained in
information incorporated by reference, that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Act and Section 21E of the 1934 Act. These
statement often can be identified by the use of terms such as "may," "will,"
"expect," "anticipate," "estimate," or "continue," or the negative thereof.
The Company intends that such forward-looking statements be subject to the
safe harbors for such statements. Forward-looking statements are subject to
certain risks and uncertainties that could cause actual results and events to
differ materially from historical results of operations and events and those
presently anticipated or projected. The Company wishes to caution readers
not to place undue reliance on any such forward-looking statements, which
speak only as of the date made. Any forward-looking statements represent
management's best judgment as to what may occur in the future. However,
forward-looking statements are subject to risks, uncertainties and important
factors beyond the control of the Company that could cause actual results and
events to differ materially form historical results of operations and events
and those presently anticipated or projected. There are a number of important
factors beyond the control of the Company that could cause actual events to
differ materially from those anticipated by any forward looking statement.
These factors include those discussed in this Prospectus under the heading
"Risk Factors" and in the "Management's Discussion and Analysis" sections of
the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1997, and in its other Securities and Exchange Commission filings
incorporated herein by reference. Such factors include adverse economic
conditions, entry of new and stronger competitors, inadequate capital,
unexpected costs, failure to integrate operations of recently acquired
subsidiaries and failure to capitalize upon access of new clientele.
Additional risks and uncertainties which may affect forward-looking
statements about the Company's Plant Y2K One-TM- business and prospects
include
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<PAGE>
the possibility that a competitor will develop a more comprehensive or less
expensive Y2K solution, delays in market awareness of Topro and its product
and service solutions, possible delays in Topro product roll out, which could
have an immediate and material adverse effect by placing Topro behind its
competitors for a time sensitive product and inability to engage qualified
staff as needed. The Company disclaims any obligation subsequently to revise
any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and the documents
incorporated by reference herein.
THE COMPANY AND RECENT DEVELOPMENTS
Topro, Inc., d/b/a TAVA Technologies, Inc. is an industrial technology
company providing control system integration products and services through
six wholly-owned subsidiaries: Topro Systems Integration, Inc. ("TSI"),
Management Design & Consulting Services, Inc. ("MDCS"), headquartered in
Atlanta, Georgia; Advanced Control Technology, Inc. ("ACT"), headquartered in
Albany, Oregon; Visioneering Holding Corp. and its subsidiary Vision
Engineering Corporation ("VHC"), headquartered in Cypress, California; and
All-Control Systems, Inc. ("ACS") headquartered in West Chester,
Pennsylvania. The Company's executive offices and the offices of TSI are
located at 2525 West Evans Avenue, Denver, Colorado 80219, telephone (303)
935-1221.
Changes, if any, in the Company's affairs which have occurred since the
end of the latest fiscal year for which audited financial statements were
included in the Company's latest Annual Report incorporated herein by
reference are described in subsequent reports on Form 10-Q or Form 8-K which
are also incorporated herein by reference.
THE OFFERING
Pursuant to this Prospectus, the Selling Shareholders may from time to
time offer all or any portion of an aggregate of 3,981,602 Shares of Common
Stock in the over-the-counter market through underwriters, dealers or
brokers or in independently negotiated transactions. SEE "Selling
Shareholders" and "Plan of Distribution." The Company will not receive any
proceeds from the sale of Shares offered by the Selling Shareholders. As of
the date of this Prospectus, 1,168,263 of the Shares registered for public sale
are outstanding, and 2,813,339 of the Shares have not yet been issued, but
may be purchased from the Company by Selling Shareholders upon exercise of
warrants or options or upon conversion of Series A Convertible Preferred
Stock and resold by the Selling Shareholders pursuant to this Prospectus. SEE
"Description of Securities." The Company will receive the cash proceeds from
the exercise, if any, of warrants and options.
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<PAGE>
RISK FACTORS
The securities offered are speculative and involve a high degree of risk.
Factors which may affect the Company's business and the securities offered
hereby include uncertain financial condition, lack of profitability, possible
need for additional capital, substantial debt and the likely adverse effect
of this Offering on the market price of the Company's Common Stock. SEE
"Risk Factors."
USE OF PROCEEDS
Any net proceeds to the Company from the exercise of outstanding warrants
or options will be used for working capital. SEE "Use of Proceeds."
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the following factors in
evaluating the Company and its business before purchasing the Common Stock
offered hereby.
FINANCIAL CONDITION; WORKING CAPITAL NEEDS. The Company has incurred net
losses for the past five years and reported net losses of $2,735,000 and
$1,855,000 for the fiscal years ended June 30, 1997 and 1996, respectively.
For the quarter ended September 30, 1997, the Company's net loss was $605,000.
The Company has experienced negative cash flow from operations and has
experienced severe cash flow issues during the past fiscal year. During the
past two fiscal years, the Company has assumed bank debt and additional
overhead expenses of companies it acquired, issued over $4,000,000 in
convertible debt obligations to provide working capital, and began to
allocate resources to its Plant Y2K initiative, which is not expected to
generate significant revenues prior to the third quarter of fiscal 1998. The
Company also has significant working capital issues related to payment and
claims issues on contracts in progress. At June 30, 1997, the Company's
working capital was $168,000. SEE Consolidated Financial Statements and
Notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." During the quarter ended September 30,
1997 the Company received cash proceeds from the exercise of options and
warrants, which significantly improved its working capital position to
$4,097,000 at quarter end. However, the Company likely will seek additional
debt or equity financing to consolidate bank debt, complete development and
establish volume sales of its Year 2000 product offerings, and to fund
increased cash requirements arising from recent acquisitions and expanded
operations. Any issuance of equity securities would result in dilution to
the interests of the Company's shareholders and any issuance of debt
securities would subject the Company to risks that interest rates may
increase or cash flow may be insufficient to repay such indebtedness.
RISKS ASSOCIATED WITH ACQUISITIONS. Over the past few years the Company
has acquired four independent control systems integrators ("CSIs"). Although
the Company believes it has an adequate infrastructure to support these
acquisitions, there can be no assurance that its current management,
personnel and other corporate infrastructure will be adequate to manage the
Company's
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<PAGE>
growth and operations which are geographically dispersed. Integrating the
operations of acquired companies may take management time and attention away
from the Company's day-to-day operations. Any inability to integrate an
acquired business into its operations, particularly in instances in which the
Company has made a significant capital investment, could have a material
adverse effect on the Company's results of operations.
DEPENDENCE ON MANAGEMENT. The Company's prospects for success currently
are greatly dependent upon the efforts and active participation of its
management team, including its Chief Executive Officer, John Jenkins, its
Chief Operating Officer, Kevin Fallon, and its Vice-President and Chief
Financial Officer, Douglas H. Kelsall. Due to the relatively recent
acquisition of MDCS, ACT, VHC and ACS, the Company also is dependent upon
management of those subsidiaries to provide continuity and assist in the
integration of those new operations into Topro's infrastructure. The loss of
the services of any key member of management could be expected to have an
adverse effect on the Company over the near term.
SIGNIFICANT DEBT; ASSET ENCUMBRANCES; RESTRICTIVE COVENANTS. At June 30,
1997, the Company had debt obligations totaling $7,573,000. At September 30,
1997, the Company's debt obligations totaled $4,811,000. Repayment of the
$2,015,000 principal balance of 9% Convertible Debentures remaining unconverted
will commence on March 1, 1999. With regard to the other debt obligations,
$2,151,000 is scheduled to mature prior to June 30, 1998. This significant
indebtedness could have important consequences to the holders of Common Stock
by restricting the Company's ability to obtain additional financing for working
capital, acquisitions or other purposes in the future and by creating the risk
that violation of a covenant or other term of the loan agreement could cause
the outstanding balance of the loan to become due, putting all of its assets
at risk. The Company's ability to make scheduled payments of principal or
interest on, or to refinance, the Debentures and bank debt will depend on future
operating performance and cash flow, which are subject to prevailing economic
conditions and financial, competitive and other factors beyond its control.
The terms of the Debentures impose substantial conditions on the Company's
ability to redeem or prepay the Debentures. The loan agreements pursuant to
which these Debentures were issued contain numerous financial, operating and
general covenants and require the Company and its subsidiaries to meet
certain financial ratios and tests. Until January 1, 1998, the minimum
financial standards under the Debentures are as follows: debt to equity
ratio, as defined in the Debenture Loan Agreement, no greater than three to
one; current ratio no less than one to one; tangible net worth not less than
negative $1,500,000. EBITDA to interest expense shall be no less than .25 to
one through September 30, 1997 and .75 to one thereafter until January 1,
1998. Thereafter, the minimum financial standards revert to the following:
debt to equity ratio not greater than 3.6 to one; minimum
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<PAGE>
tangible net worth of $1,000,000; and EBITDA times interest expense of not
less than 1.5 to one. A failure to comply with the loan agreement covenants
could result in an event of default which could permit acceleration of the
debt. The obligations of the Company under the loan agreements are secured
by a pledge of all of the capital stock of ACT, VHC and ACS and by a first
priority security interest in substantially all of the assets of Topro and
its subsidiaries. If the Company becomes insolvent or is liquidated, or if
payment under the loan agreement is accelerated, the investor would be
entitled to exercise remedies available to secured creditors under applicable
law and pursuant to the loan agreement. Accordingly, the Debenture holders
will have a prior claim on the assets of the Company and its subsidiaries.
In addition to the Debentures, the Company and its subsidiaries have other
outstanding credit facilities for which assets of the subsidiaries are
pledged as collateral. If the Company is not successful in refinancing these
credit facilities, its overall liquidity would be negatively impacted and
default could result in acceleration of other obligations, including the
Debentures. Foreclosure on the assets pledged to secure repayment of the
Debentures and other debt could reduce the Company's assets to a level at
which assets were not sufficient to make any distribution to shareholders in
the event of liquidation. SEE Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
MARKET OVERHANG. As of December 1, 1997, the Company has reserved
3,722,258 shares for issuance upon exercise, and 2,676,641 shares for
issuance upon conversion of, outstanding securities, and has registered most
of those shares, together with a significant number of privately issued
shares, for public sale by the holders pursuant to this Prospectus, and two
registration statements filed previously. The outstanding privately issued
Shares were acquired from the Company, and shares are issuable upon
conversion of Preferred Stock and exercise of warrants and options, at prices
substantially below the current market price. Any sale into the public
market of Shares purchased privately could be expected to have a depressive
effect on the market price of the Company's Common Stock. SEE "Description
of Securities."
POSSIBLE CHANGE IN CONTROL DUE TO SALES UNDER THIS PROSPECTUS. Shares
registered for sale pursuant to this Prospectus include shares issuable upon
exercise and conversion of securities beneficially owned by principal
shareholders and employees of the Company. Absent this Prospectus, those
Shares could not be sold into the public market until one year following the
date of exercise or conversion. Shares registered for sale under this
Prospectus represent approximately 19% of the Company's outstanding Common
Stock. If all of those Shares are sold, current principal shareholders would
no longer have any ability to influence the Company and a change in control
could be effected.
INDUSTRY AND ECONOMIC CONDITIONS. A sizable portion of the Company's
business is comprised of projects representing capital expenditures, rather
than expense items, to its customers. Management believes that its customer
base is susceptible to general depressive economic factors which cause such
capital projects to be delayed and scaled back and payments to be postponed
and disputed. Although general economic factors may affect all industries,
management believes that the Company's business may be more susceptible than
many due to the high cost of these projects.
NO DIVIDENDS. Topro has not paid dividends since inception on its Common
Stock, and it does not contemplate paying dividends in the foreseeable future
on its Common Stock in order to use all of its earnings, if any, to finance
expansion of its operations. Moreover, the Company is required to pay a
cumulative annual dividend of $.90 per share on its Series A Convertible
Preferred Stock, before any dividend may be declared or paid to holders of
Common Stock. SEE "Market for the Company's Common Equity and Related
Shareholder Matters - Dividends."
-7-
<PAGE>
PREFERRED STOCK. Topro is authorized to issue up to 10,000,000 shares of
preferred stock. The Board of Directors has the power to establish the
dividend rates, liquidation preferences, voting rights, redemption and
conversion terms and privileges with respect to any series of preferred
stock. The issuance of any shares of preferred stock having rights superior
to those of Topro's Common Stock may result in a decrease in the value or
market price of the Common Stock, provided a market exists, and further could
be used by the Board as a device to prevent a change in control of Topro.
Holders of preferred stock may have the right to receive dividends, certain
preferences in liquidation and conversion rights. As of the date of this
Prospectus, there are 133,334 Shares of Preferred Stock issued and
outstanding designated as "Series A Convertible Preferred Stock." The Series
A Convertible Preferred Stock has a 6% cumulative annual dividend and has the
right to vote, at the rate of ten votes per share, on all matters submitted
to a vote of shareholders. SEE "Description of Securities - Preferred Stock."
USE OF PROCEEDS
The Company will not receive any proceeds from sales of Shares by the
Selling Shareholders and will not receive any cash proceeds if its
outstanding Convertible Preferred Stock is converted to Common Stock. The
Company will receive cash proceeds from the exercise, if any, of outstanding
warrants and options. If all the options and warrants are exercised by the
Selling Shareholders, after deduction of expenses of the offering estimated
to total $30,000 the Company would receive approximately $3,431,073 in net
proceeds, which will be used for working capital.
SELLING SHAREHOLDERS
The following table sets forth information known to the Company regarding
the beneficial ownership of Shares of the Company's Common Stock as of
November 24, 1997 and as adjusted to reflect the sale of the Shares offered
hereby, by each Selling Shareholder. The information set forth below is
based upon information concerning beneficial ownership provided to the
Company by each Selling Shareholder. Except as otherwise indicated below,
each of the persons named in the table has sole voting and investment power
with respect to the shares set forth opposite such person's name.
<TABLE>
Shares Beneficially Owned Shares Beneficially
Prior to Offering(1) Number of Shares Offered Hereby Owned After Offering
-------------------------- --------------------------------- ----------------------
Shares Underlying
Name Number Percent Shares Convertible Securities(2) Number(3) Percent(3)
- ----------------------------------- ------ ------- ------ ------------------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Phillip Bettendorf 28,000 * 4,000 24,000 -0- *
Creative Business Strategies, Inc. 10,000 * -0- 10,000 -0- *
CRM Enterprises 125,000 * 125,000 -0- -0- *
R. Larry Ethridge 5,000 * -0- 5,000 -0- *
Europa International Inc. 225,000 1.27% 225,000 -0- -0- *
Martin Fallon, Jr. 312,211(4) 1.77% 63,158 -0- 249,053 1.41%
Martin Fallon, Sr. & Helen Fallon JTROS 193,474(4) 1.09% 42,105 -0- 151,369(4) *
First Stevenson Charitable
Remainder Trust 250,000 1.39% 250,000 -0- -0- *
</TABLE>
-8-
<PAGE>
<TABLE>
Shares Beneficially Owned Shares Beneficially
Prior to Offering(1) Number of Shares Offered Hereby Owned After Offering
-------------------------- --------------------------------- ----------------------
Shares Underlying
Name Number Percent Shares Convertible Securities(2) Number(3) Percent(3)
- ----------------------------------- ------ ------- ------ ------------------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
E. Gregory Fisher 30,000 * -0- 10,000 20,000 *
H. Robert Gill 45,000 * -0- 15,000 30,000 *
Kaljit Hairon 3,500 * 500 3,000 -0- *
James Haney 42,000 * 6,000 36,000 -0- *
H. Robert Hodge 45,000 * -0- 15,000 30,000 *
John Jenkins 587,142(5) 3.25% -0- 235,000 352,142 1.95%
J. Scott Liolios 35,500 * -0- 35,500 -0- *
Don Mounchou 28,000 * 4,000 24,000 -0- *
Steve Patino 2,000 * -0- 2,000 -0- *
Ponte Vedra Partners Ltd. 100,000 * 100,000 -0- -0- *
Pro Futures Bridge
Capital Fund, Inc. 1,823,339 9.57% -0- 1,823,339 -0- *
Mark Qualey 2,000 * -0- 2,000 -0- *
Renaissance Capital Group, Inc. 1,368,301 7.19% -0- 25,000 1,343,301 7.06%
Tom Reski 28,000 * 4,000 24,000 -0- *
Randy J. Sasaki 35,500 * -0- 35,500 -0- *
Elliott S. & Lois C. Schlissel 8,000 * 8,000 -0- -0- *
David Sidhu 3,500 * 500 3,000 -0- *
Jagir Singh Sidhu 3,500 * 500 3,000 -0- *
Surjit Sidhu 3,500 * 500 3,000 -0- *
Michael C. Taylor Family
Revocable Living Trust 532,000 3.11% 76,000 456,000 -0- *
John R. Teed, Jr. 14,000 * 2,000 12,000 -0- *
Valor Capital Managment, LP 225,000 1.27% 225,000 -0- -0- *
Barry Wagoner 14,000 * 2,000 12,000 -0- *
Willet Partners 30,000 * 30,000 -0- -0- *
</TABLE>
- -------------------------
* Less than one percent.
(1) Beneficial ownership is calculated in accordance with Rule 13d-3(d) of
the Securities Exchange Act of 1934, as amended. Under Rule 13d-3(d),
shares not outstanding that are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding
for the purpose of calculating the number and percentage owned by such
person of the class, but not deemed outstanding for the purpose of
calculating the percentage owned of the class by any other person.
(2) The number of Shares underlying the Convertible Securities and offered for
sale by the Selling Shareholders is subject to adjustment in accordance
with anti-dilution provisions of the Convertible Securities.
(3) Assumes that the Convertible Securities are converted/exercised and all
Shares registered are sold by the Selling Shareholders.
(4) Includes Shares subject to a lock-up agreement with Renaissance and
Bathgate McColley Capital Group LLC whereby the holders have agreed that
without prior consent they will sell no more than 22% of the shares issued
in the ACT merger prior to February 7, 1998, and no more than 25% of those
shares prior to February 7, 1999. In the event other shareholders subject
to this lock-up agreement sell less than 22% and 25% of their Shares during
such period, other shareholders may sell more so long as the aggregate
number of Shares sold by the group does not exceed 22% and 25%,
respectively.
(5) Includes 392,071 shares issuable upon exercise of options and warrants.
Includes securities held of record by Mr. Jenkins' IRA.
-9-
<PAGE>
RELATIONSHIPS AND TRANSACTIONS WITH CERTAIN SELLING SHAREHOLDERS
Martin Fallon, Sr., Helen Fallon and Martin Fallon, Jr. were officers,
directors and/or shareholders of ACS at the time ACS was acquired by the
Company. In connection with the acquisition each of these persons in his
individual capacity or as an officer, director or shareholder of ACS, entered
into agreements which were related to and which were exhibits to the
Agreement of Merger dated December 31, 1996. One of the related agreements
includes an escrow arrangement relating to a potential deferred tax liability
due to the termination of ACS' status as a subchapter S corporation at the
time of acquisition. This escrow arrangement generally provides that 61,733
shares issued in connection with the acquisition are to be held to cover the
deferred tax liability should the Company be required to pay the liability.
The escrow shares include 6,494 shares held by Helen & Martin Fallon, Sr. as
joint tenants and 9,754 shares held by Martin Fallon, Jr. The amount of
shares held in escrow will be reduced as the deferred tax liability is
reduced on the Company's books. The Selling Shareholders can replace the
escrowed shares with cash or other collateral acceptable to the Company,
thereby freeing the shares from the escrow arrangement. Other agreements
related to the Agreement of Merger include a sales representation agreement
and an option to purchase certain of ACS' software products relating to the
color printing industry. Both agreements are between ACS and Fallon
Technology, Inc. ("Fallon Tech"), a Pennsylvania corporation owned by members
of the Fallon family, including Kevin Fallon, COO of the Company. Under these
agreements Fallon Tech is granted, among other things, the exclusive
authority and right to use, demonstrate, sell, and grant sub-licenses of
certain technology, and the right to purchase an exclusive license with
respect to the color printing technology.
E. Gregory Fisher is a president of the Company's MDCS subsidiary.
Shares registered on behalf of Messrs. Liolios, Qualey, Patino and
Sasaki are those underlying options granted to Pacific Consulting Group, Inc.
pursuant to a consulting agreement. Pacific Consulting Group, Inc. has been
engaged by the Company as a consultant since February 1, 1996.
H. Robert Gill currently serves as a director of the Company. Messrs.
Ethridge and Hodge are former directors of the Company. Mr. Ethridge also
served as the Company's President until January 1995 and its Chairman until
August 1997.
PLAN OF DISTRIBUTION
SALE OF SECURITIES BY SELLING SHAREHOLDERS
The Selling Shareholders have advised the Company that prior to the date
of this Prospectus they have not made any agreements or arrangements with any
underwriters, brokers or dealers regarding the resale of the Shares. The
Company has been advised by the Selling Shareholders that the Shares may at
any time or from time to time be offered for sale either directly by the
Selling Shareholders or by their transferees or other successors in interest.
Such sales may be made in the over-the-counter market or in privately
negotiated transactions.
-10-
<PAGE>
The Selling Shareholders have exercised their right to require the
Company to register the Shares which the Selling Shareholders received from
the Company in connection with: (1) the acquisition of ACS, a private
transaction; or (2) the purchase of the securities in a private transaction.
The Selling Shareholders were granted certain registration rights pursuant
to which the Company has agreed to maintain a current registration statement
to permit public sale of the Shares. The Company will pay all of the
expenses incident to the offering and sale of the Shares to the public by the
Selling Shareholders other than commissions and discounts of underwriters,
dealers or agents, if any. Expenses to be paid by the Company include legal
and accounting fees in connection with the preparation of the Registration
Statement of which this Prospectus is a part, legal fees in connection with
the qualification of the sale of the Shares under the laws of certain states,
registration and filing fees, printing expenses, and other expenses. The
Company will not receive any proceeds from the sale of the Shares by the
Selling Shareholders. However, the Company will receive the exercise price of
the Warrants and Options if and when they are exercised.
The Company anticipates that the Selling Shareholders from time to time
will offer the Shares through: (i) dealers or agents or in ordinary
brokerage transactions; (ii) direct sales to purchasers or sales effected
through an agent; (iii) privately negotiated transactions; or (iv)
combinations of any such methods. The Shares would be sold at market prices
prevailing at the time of sale or at negotiated prices. Dealers and brokers
involved in the offer and sale of the Shares may receive compensation in the
form of discounts and commissions. Such compensation, which may be in excess
of ordinary brokerage commissions, may be paid by the Selling Shareholders
and/or the purchasers of Shares for whom such underwriters, dealers or agents
may act. The Selling Shareholders and any dealers or agents which
participate in the distribution of the Shares may be deemed to be
"underwriters" as defined in the Securities Act of 1933, as amended (the
"1933 Act") and any profit on the sale of the Shares and any discounts,
commissions or concessions received by any dealers or agents might be deemed
by the NASD to constitute underwriting compensation.
If the Company is notified by the Selling Shareholders that any material
arrangement has been entered into with an underwriter for the sale of Shares,
a supplemental prospectus will be filed to disclose such of the following
information as the Company believes appropriate: (i) the name of the
participating underwriter; (ii) the number of Shares involved; (iii) the
price at which such Shares are sold; (iv) the commissions paid or discounts
or concessions allowed to such underwriter; and (v) other facts material to
the transaction.
Sales of Shares in the over-the-counter market may be by means of one or
more of the following: (i) 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; (ii) purchases by a
dealer as principal and resale by such dealer for its account pursuant to
this Prospectus; and (iii) ordinary brokerage transactions and transactions
in which the broker solicits purchasers. In effecting sales, brokers or
dealers engaged by the Selling Shareholders may arrange for other brokers or
dealers to participate.
-11-
<PAGE>
The sale of the Shares by the Selling Shareholders could be expected to
have a depressive effect upon the market price of the Company's Common Stock
and hamper the Company's ability to raise further capital. SEE "Risk Factors -
Market Overhang."
PRIVATE SALE OF COMMON STOCK BY THE COMPANY
The Company will issue Shares of "restricted" Common Stock to the
Selling Shareholders upon their exercise of outstanding warrants or options
or conversion of outstanding Series A Convertible Preferred Stock. The
Company anticipates that Shares issued upon exercise/conversion of these
securities will be sold by the Selling Shareholders as described above.
INDEMNIFICATION
The Company's Articles of Incorporation provide that the Company shall
indemnify any officer, employee, agent or director against liabilities
(including the obligation to pay a judgment, settlement, penalty, fine or
expense), incurred in a proceeding (including any civil, criminal or
investigative proceeding) to which the person was a party by reason of such
status. Such indemnity may be provided if the person's actions resulting in
the liabilities: (i) were taken in good faith; (ii) were reasonably believed
to have been in the Company's best interest with respect to actions taken in
the person's official capacity; (iii) were reasonably believed not to be
opposed to the Company's best interest with respect to other actions; and
(iv) with respect to any criminal action, the director had no reasonable
grounds to believe the actions were unlawful. Unless the person is
successful upon the merits in such an action, indemnification may generally
be awarded only 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 the
director to be indemnified.
A director, employee, agent, or officer who is wholly successful, on the
merits or otherwise, in defense of any proceeding to which he or she was a
party, is entitled to receive indemnification against reasonable expenses,
including attorneys' fees, incurred in connection with the proceeding. In
addition, a corporation may indemnify or advance expenses to an officer,
employee or agent who is not a director to a greater extent than permitted
for indemnification of directors, if consistent with law and if provided for
by its articles of incorporation, bylaws, resolution of its shareholders or
directors or in a contract.
In connection with this Offering the Company and the Selling
Shareholders have agreed to indemnify each other against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. Insofar as indemnification for liabilities arising under the Act of
1933 may be permitted to directors, officers and controlling persons of the
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer 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.
-12-
<PAGE>
DESCRIPTION OF SECURITIES
As of the date of this Prospectus, the Company is authorized to issue
200,000,000 Shares of $.0001 par value Common Stock and 10,000,000 Shares of
$.0001 par value Preferred Stock. No holder of any shares has any preemptive
right to subscribe for any of the Company's securities. Management is not
aware that any provision in the Company's Articles of Incorporation or Bylaws
would delay, defer or prevent a change in control of the Company.
NO CUMULATIVE VOTING. Each holder of Common Stock is entitled to one
vote per Share with respect to all matters that are required by law to be
submitted to Security holders. Security holders are not entitled to
cumulative voting in the election of directors. Accordingly, the holders of
more than 50% of the Shares voting for the election of directors can elect
100% of the directors if they choose to do so; and, in such event, the
holders of the remaining Shares voting for the election of the directors will
be unable to elect any person or persons to the Board of Directors.
DIVIDEND POLICY. Since its inception the Company has not paid any cash
dividends on its Common Stock. Dividends are payable when and if declared by
the Board of Directors from funds legally available therefor. Any declaration
in the future on any cash or stock dividends will be at the discretion of the
Board of Directors. The Company's ability to pay dividends is not restricted
under any of the various promissory notes, debentures or loan agreements to
which it is a party or under any other arrangements or agreements to which it
is a party, except that cumulative dividends on its Series A Convertible
Preferred Stock must be paid before dividends may be paid to holders of Common
Stock.
ISSUED AND OUTSTANDING. As of December 1, 1997, the Company had issued
and outstanding 17,666,403 Shares of Common Stock and 133,334 Shares of
Preferred Stock.
SERIES A CONVERTIBLE PREFERRED STOCK. As of the date of this
Prospectus, there are 133,334 Shares of Preferred Stock issued and
outstanding designated as "Series A Convertible Preferred Stock." Each share
of Series A Convertible Preferred Stock shall be converted into ten shares of
the Company's $.0001 par value Common Stock upon the earliest to occur of the
following events: (1) at the option of the holder, upon notice to the
Company, at any time; or (2) automatically, at any time commencing one year
from the date of issuance of such share, if (a) the closing sale price of the
Common Stock as reported by Nasdaq for 20 for consecutive trading days is
$3.00 or more, and (b) the Common Stock into which the share of Series A
Convertible Preferred Stock is convertible has been registered by the Company
for public sale by the holder; or (3) automatically, on the date which is
five years and one day following the date of issuance of such share. Each
share of Series A Convertible Preferred Stock is entitled to receive an
annual dividend of $0.90 per share, payable quarterly, from funds legally
available therefor, as and if declared by the Board of Directors, such
dividend to be cumulative and to be paid before any dividend is paid on
outstanding shares of Common Stock. Shares of Series A Convertible Preferred
Stock have the right to vote in the election of directors and on all other
matters which may be submitted to a vote of shareholders of the Company, and
are entitled to the number of votes per share equal to the number of shares
of Common Stock which would be issuable upon conversion as of the record date
for determining shareholders entitled to vote on such matter (currently, ten
votes per share of Preferred Stock).
SECURITIES REGISTERED HEREBY.
Effective February 7, 1997 the Company issued 1,883,334 Shares to the
shareholders of ACS in exchange for all of the outstanding shares of ACS. The
Company granted certain registration rights which obligate it to include
those shares in the registration statement of which this Prospectus is a
part; however, with respect to this Prospectus Kevin Fallon, the Company's
COO, has waived that right with respect to the 1,326,315 shares he received
in the merger and other members of the Fallon family have waived that right
with respect to 473,685 shares, resulting in only 105,263 of such shares
being registered
-13-
<PAGE>
hereby. The balance of 83,334 shares issued in the ACS acquisition have
previously been registered for sale by the holders, who are not affiliated
with Mr. Fallon.
Effective August 1, 1997 the Company issued options to E. Gregory Fisher
to purchase up to 10,000 Shares of Common Stock at an exercise price of $5.97
per Share, equal to the closing bid price at that date. These options were
issuable automatically under the Company's employment agreement with Mr.
Fisher, which was entered in connection with the Company's acquisition of
MDCS, of which Mr. Fisher was founder and President. The Common Stock
underlying the options is registered for public sale pursuant to this
Prospectus.
Effective April 29, 1997 and June 30, 1997 the Company issued in private
placements 133,334 shares of Series A Convertible Preferred Stock (the
"Preferred Stock") and warrants to purchase 400,000 shares of the Company's
Common Stock. Each share of the Preferred Stock can be converted into ten
(subject to adjustment) shares of Common Stock at the option of the holder,
and automatically upon the occurrence of certain events. The warrants, which
are exercisable at $2.00 per share, expire June 30, 1999. In accordance with
a registration rights agreement, the Common Stock underlying the Preferred
Stock and the warrants is registered for public sale pursuant to this
Prospectus, as are 99,999 shares underlying two-year warrants, exercisable at
$1.50 per share, which were issued pursuant to that agreement at the rate of
33,333 per month commencing September 30, 1997 due to the Company's failure
to effect registration by the end of each month.
Shares held by Elliott S. & Lois C. Schlissel were issued in connection
with the Company's sale of 10% Senior Convertible Notes in 1995. The balance
of shares issued in that offering were previously registered for sale by the
holders.
Shares registered on behalf of Messrs. Ethridge, Gill and Hodge are
issuable upon exercise of options granted to Mr. Ethridge in 1995 and Messrs.
Gill and Hodge in 1992, 1994 and 1995 in recognition of their service as
directors of the Company. As of October 15, 1997, Mr. Gill remains a
director of the Company. Each of these persons holds 5,000 options
exercisable at a price of $.625 until February 22, 2005. In addition,
Messrs. Gill and Hodge each own 5,000 options exercisable at a price of $3.75
until November 23, 2002 and 5,000 options exercisable at a price of $3.50
until February 14, 2004.
The Company also has registered for sale by the holders 100,000 "bonus"
shares, 300,000 shares underlying options, exercisable at $2.50 per share
until January 1, 2000 and 300,000 shares underlying options exercisable at
$2.75 per share until January 1, 2001, issued to former shareholders of VHC in
connection with the Company's acquisition of VHC.
Included in this Prospectus for sale by the holders are 955,000 shares
of Common Stock sold to institutional investors in November 1997.
Shares registered on behalf of Renaissance Capital Group, Inc. are
issuable upon exercise of a warrant, exercisable to purchase 25,000 shares at
$1.50 per share, issued as consideration for the waiver of certain covenants
in its Debenture Loan Agreement.
Of the 75,000 Options granted to Pacific Consulting Group, Inc., 50,000
are exercisable at $2.75 per share and 25,000 are exercisable at $4.00 per
share, until February 1, 2002
-14-
<PAGE>
TRANSFER AND WARRANT AGENT
American Securities Transfer, Inc., 938 Quail Street, Lakewood, Colorado
80215, serves as transfer agent for the Common Stock and as Warrant agent for
the Public Warrants.
The Company serves as agent for its privately issued Series A
Convertible Preferred Stock, notes, options, debentures and warrants.
LEGAL MATTERS
The legality of the issuance of the Shares of Common Stock being offered
by the Selling Shareholders hereunder will be passed upon on behalf of the
Company by Key & Mehringer, P.C., 555 17th Street, Suite 3405, Denver,
Colorado 80202.
EXPERTS
The consolidated statements of operations, stockholders' equity and cash
flows for the year ended June 30, 1997, which appear in the Company's Form
10-KSB for the fiscal year ended June 30, 1997 have been incorporated by
reference herein in reliance upon the report, dated September 26, 1997, of
BDO Seidman LLP, Denver, Colorado, independent certified public accountants,
and upon the authority of said firm as experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity and cash
flows of Topro, Inc. and subsidiaries for the year ended June 30, 1996 which
appear in the Company's Form 10-KSB for the fiscal year ended June 30, 1997,
have been incorporated by reference herein in reliance upon the report, dated
October 4, 1996 of Hein + Associates LLP, Denver, Colorado, independent
auditors, and upon the authority of said firm as experts in accounting and
auditing.
The combined financial statements of All-Control Systems, Inc. and
affiliate which appear in Amendment No. 1 on Form 8-K/A dated February 7,
1997, Amendment No. 2 on Form 8-K/A dated February 13, 1997, Amendment No. 3
on Form 8-K/A dated February 28, 1997 and Amendment No. 4 on Form 8-K/A filed
on March 5, 1997 to Topro, Inc.'s Current Report on Form 8-K dated January 15,
1997, have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the periods set forth in their report
included therein and are incorporated herein by reference in reliance upon
such report given upon the authority of said firm as experts in accounting and
auditing.
-15-
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST BE
NOT RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES TO ANY PERSON
IN ANY JURISDICTION WHERE SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME
DOES NOT IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
TOPRO, INC.
TABLE OF CONTENTS
Available Information; Documents
Incorporated by Reference. . . . 2
Forward Looking Statements . . . . 3
Prospectus Summary . . . . . . . . 4 3,981,602 Shares
Risk Factors . . . . . . . . . . . 5 of Common Stock
Use of Proceeds. . . . . . . . . . 8
Selling Shareholders . . . . . . . 8
Plan Of Distribution . . . . . . . 10 PROSPECTUS
Description Of Securities. . . . . 13
Legal Matters. . . . . . . . . . . 15
Experts. . . . . . . . . . . . . . 15 December __, 1997
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table shows all expenses of the offering, other than
underwriting discounts and commissions.
SEC filing fee $ 6,854
Printing costs (including Edgar formatting) $ 7,000
Legal fees $10,000
Accounting fees $ 5,750
Miscellaneous $ 396
-------
Total $30,000
-------
-------
All amounts listed above, except for the SEC filing fee, are estimates.
All expenses itemized above will be paid by the Registrant. Sales agent
discounts and commissions to any brokers or dealers will be borne by the
Selling Shareholders for the Shares offered by the Selling Shareholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7-109-101 through 7-109-110 of the Colorado Business Corporation
Act and Article 5 of the Company's Articles of Incorporation, under certain
circumstances provide for the indemnification of the Company's officers,
directors and controlling persons against liabilities which they may incur in
such capacities. A summarization of the circumstances in which such
indemnification is provided for is contained herein, but that description is
qualified in its entirety by reference to the Company's Articles of
Incorporation and the relevant Section of the Colorado Business Corporation Act.
The Company's Articles provide that the Company shall indemnify any
officer, employee, agent or director against liabilities (including the
obligation to pay a judgment, settlement, penalty, fine or expense), incurred
in a proceeding (including any civil, criminal or investigative proceeding)
to which the person was a party by reason of such status. Such indemnity
may be provided if the person's actions resulting in the liabilities: (i)
were taken in good faith; (ii) were reasonably believed to have been in the
Company's best interest with respect to actions taken in the person's
official capacity; (iii) were reasonably believed not to be opposed to the
Company's best interest with respect to other actions; and (iv) with respect
to any criminal action, the director had no reasonable grounds to believe the
actions were unlawful. Unless the person is successful upon the merits in
such an action, indemnification may generally be awarded only 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 the director to be indemnified.
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A director, employee, agent, or officer who is wholly successful, on the
merits or otherwise, in defense of any proceeding to which he or she was a
party, is entitled to receive indemnification against reasonable expenses,
including attorneys' fees, incurred in connection with the proceeding. In
addition, a corporation may indemnify or advance expenses to an officer,
employee or agent who is not a director to a greater extent than permitted
for indemnification of directors, if consistent with law and if provided for
by its articles of incorporation, bylaws, resolution of its shareholders or
directors or in a contract.
In addition to the foregoing, unless hereafter limited by the Company's
Articles of Incorporation, a court, upon petition by an officer or director,
may order the Company to indemnify such officer or director against
liabilities arising in connection with any proceeding. A court may order the
Company to provide such indemnification, whether or not the applicable
standard of conduct described above was met by the officer or director. To
order such indemnification the court must determine that the petitioner is
fairly and reasonably entitled to such indemnification in light of the
circumstances. With respect to liabilities arising as a result of
proceedings on behalf of the Company, a court may only require that a
petitioner be indemnified as to the reasonable expenses incurred.
Colorado law authorizes the Company to reimburse or pay reasonable
expenses incurred by a director, officer, employee or agent in connection
with a proceeding, in advance of a final disposition of the matter. Such
advances of expenses are permitted if the person furnishes to the Company a
written statement of his belief that he met the applicable standard of
conduct required to permit such indemnification. The person seeking such
expense advances must also provide the Company with a written agreement to
repay such advances if it is determined the applicable standard of conduct
was not met. A determination must also be made that the facts known to the
Company would not preclude indemnification.
The statutory section cited above further specifies that any provisions
for indemnification of or advances for expenses to directors which may be
contained in the Company's Articles of Incorporation, Bylaws, resolutions of
its shareholders or directors, or in a contract (except for insurance
policies) shall be valid only to the extent such provisions are consistent
with the Colorado statutes and any limitations upon indemnification set forth
in the Articles of Incorporation.
The statutory provision cited above also grants the power to the Company
to purchase and maintain insurance policies which protect any director,
officer, employee, fiduciary or agent against any liability asserted against
or incurred by them in such capacity arising out of his status as such. Such
policies may provide for indemnification whether or not the corporation would
otherwise have the power to provide for it. No such policies providing
protection against liabilities imposed under the securities laws have been
obtained by the Company.
Insofar as indemnification for liabilities arising under the Act of 1933
may be permitted to directors, officers and controlling persons of the issuer
pursuant to the foregoing provisions, or otherwise, the small business issuer
has been advised that in the opinion of the Securities and
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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 small business issuer of the expenses incurred
or paid by a director, officer or controlling person of the small business
issuer 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 small business issuer 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 its is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
ITEM 16. EXHIBITS. The following is a complete list of exhibits filed as part
of this Registration Statement, which exhibits are filed herewith or
incorporated by reference herein.
Exhibit
Number Description
- ------- -----------
2.1 Agreement and Plan of Merger dated July 26, 1995 regarding the
acquisition of Management Design and Consulting Services, Inc. (A)
2.2 Agreement and Plan of Merger dated February 21, 1996 - regarding
the acquisition of Advanced Control Technology, Inc. (B)
2.3 Agreement of Merger dated May 17, 1996 - regarding the acquisition
of Visioneering Holding Corporation. (C)
2.4 Agreement of Merger dated December 31, 1996 - regarding the
acquisition of ACS. (G)
2.5 Amendment No. 1 to the ACS Agreement of Merger. (G)
3.3 Restated Articles of Incorporation. (F)
3.4 Amendment to Articles of Incorporation - Designation of Series A
Preferred Stock. (H)
3.5 Bylaws (D)
4.1 Specimen form of the Company's Stock Certificate. (D)
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4.2 Instruments defining rights of security holders.
(a) Registration Rights Agreement. Previously filed.
(b) See Exhibit 3.4.
(c) Registration Rights Agreement - November 1997. Previously
filed.
5.1 Opinion of Key & Mehringer, P.C. as to the legality of the
securities registered hereby. Previously filed.
21.1 List of Subsidiaries. (I)
23.1 Consent of Key & Mehringer, P.C. See Exhibit 5.1.
23.2 Consent of Hein + Associates LLP. Filed herewith.
23.3 Consent of BDO Seidman, LLP. Filed herewith.
24.1 Power of Attorney. Previously filed.
99.1 Consent of Director Nominee - Judith A. Draper. Previously filed.
99.2 Consent of Director Nominee - Rick L. Schleufer. Previously filed.
- --------------------
(A) Incorporated by reference from the Company's Form 8-K dated August 10,
1995.
(B) Incorporated by reference from the Company's Form 8-K dated February
21, 1996.
(C) Incorporated by reference from the Company's Form 8-K dated May 30,
1996.
(D) Incorporated by reference from the Company's to Registration Statement
on Form S-1, File No. 33-47159, effective June 17, 1992.
(E) Incorporated by reference from the Company's Form 10-KSB for the
fiscal year ended June 30, 1996.
(F) Incorporated by reference from the Company's Registration Statement on
Form SB-2, File No. 33-98788.
(G) Incorporated by reference from the Company's Form 8-K dated December
31, 1996, as amended.
(H) Incorporated by reference from the Company's Form 10-QSB for the
quarter ended March 31, 1997.
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(I) Incorporated by reference from the Company's Registration Statement on
Form S-3, File No. 333-170891, effective March 6, 1997.
ITEM 17. UNDERTAKINGS.
A. The undersigned small business issuer will:
(1) file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to include any
additional or changed material information on the plan of distribution.
(2) for the purpose of determining liability under the Securities Act
of 1933, treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities
at that time to be the initial bona fide offering thereof.
(3) file a post-effective amendment to remove from registration any
of the securities remain unsold at the termination of the offering.
B. Insofar as indemnification for liabilities arising under the Act of
1933 may be permitted to directors, officers and controlling persons of the
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer 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 small business issuer of the expenses incurred
or paid by a director, officer or controlling person of the small business
issuer in the successful defense of any action, (suit or proceeding) is
asserted by the director, officer or controlling person in connection with
the securities being registered, the small business issuer 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 its is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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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 of 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 Denver, State of
Colorado, on December 22, 1997.
TOPRO, INC., Registrant
By: /s/ John Jenkins
--------------------------------
John Jenkins, President and CEO
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.
Signature Title Date
- --------- ----- ----
/s/ John Jenkins President, Chief Executive December 22, 1997
- --------------------------- Officer, and Director
John Jenkins
/s/ Douglas H. Kelsall Principal Financial and December 22, 1997
- --------------------------- Accounting Officer
Douglas H. Kelsall
/s/ H. Robert Gill* Director December 22, 1997
- ---------------------------
H. Robert Gill
/s/ Robert C. Pearson* Director December 22, 1997
- ---------------------------
Robert C. Pearson
/s/ Robert L. Costello* Director December 22, 1997
- ---------------------------
Robert L. Costello
*By John Jenkins and/or Douglas H. Kelsall,
Attorney-in-fact
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Exhibit 23.2
Independent Auditor's Consent
We consent to the incorporation by reference in the Form S-3 Registration
Statement of Topro, Inc. of our report dated October 4, 1996, accompanying
the consolidated financial statements of Topro, Inc., and to the use of our
name and the statements with respect to us, as appearing under the heading
"Experts" in the Prospectus.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES LLP
Denver, Colorado
December 22, 1997
<PAGE>
Exhibit 23.3
Consent of Independent Certified Public Accountants
Topro, Inc.
Denver, Colorado
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement, of our report dated
December 18, 1996 (except for Note 3, for which the date is December 31, 1996
and Note 6, for which the date is February 10, 1997), relating to the combined
financial statements of All Control Systems, Inc. appearing in Amendment No. 1
on Form 8-K/A dated February 7, 1997, Amendment No. 2 on Form 8-K/A dated
February 13, 1997, Amendment No. 3 on Form 8-K/A dated February 28, 1997 and
Amendment No. 4 on Form 8-K/A filed on March 5, 1997 to Topro, Inc.'s Current
Report on Form 8-K dated January 15, 1997, and our report dated September 26,
1997, relating to the consolidated financial statements of Topro, Inc. and
subsidiaries appearing in the Company's Annual Report on Form 10-KSB for its
fiscal year ended June 30, 1997 and to the reference to our Firm under the
heading "Experts" in the Prospectus.
BDO SEIDMAN, LLP
/s/ BDO SEIDMAN, LLP
December 22, 1997
