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As filed with the Securities and Exchange Commission on March 3, 1999
Registration No. 333-68327
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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
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AMERICAN TECHNOLOGIES GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 95-4307525
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1017 South Mountain Avenue
Monrovia, California 91016
(626) 357-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
American Technologies Group, Inc.
1017 South Mountain Avenue
Monrovia, California 91016
(626) 357-5000
(Name, Address, and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
JOHN M. DAB, ESQ.
General Counsel
American Technologies Group, Inc.
1017 South Mountain Avenue
Monrovia, California 91016
(626) 357-5000
Telecopy: (626) 357-4464
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE 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]
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.[ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Proposed Proposed
Maximum Maximum Amount of
Amount to be Offering Aggregate Registration
Title of Securities to Registered Price per Offering Fee
be Registered Share (1) Price (1)
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<S> <C> <C> <C> <C>
Common Stock, $0.001 2,500,000 shares $0.65 $ 1,625,000 $ 451.75 (5)
par value (2)
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Common Stock, $0.001 440,000 shares $0.58 $ 255,200 $ 70.95 (5)
par value (3)
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Common Stock, $0.001 700,000 shares $0.51 $ 357,500 $ 99.25
par value
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Common Stock, $0.001 212,000 shares $0.75 $ 159,375 $ 44.31 (6)
par value (4)
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Common Stock, $0.001 620,000 shares $0.50 $ 310,000 $ 86.18
par value (3)
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Total 4,472,500 shares $ 2,706,575 $ 752.44 (7)
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(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c).
(2) Issuable upon the conversion of the 6% Convertible Debentures. This is
not intended to constitute a prediction as to the number of shares of Common
Stock into which the Debentures will be converted. In addition to the shares
set forth in the table, pursuant to Rule 416 under the Securities Act of
1933, as amended, this Registration Statement also covers an indeterminate
number of additional shares of Common Stock as may become issuable as a
result of stock splits, stock dividends and antidilution provisions.
(3) Issuable upon the conversion of the 3% Convertible Debentures. This is
not intended to constitute a prediction as to the number of shares of Common
Stock into which the Debentures will be converted. In addition to the shares
set forth in the table, pursuant to Rule 416 under the Securities Act of
1933, as amended, this Registration Statement also covers an indeterminate
number of additional shares of Common Stock as may become issuable as a
result of stock splits, stock dividends and antidilution provisions.
(4) Issuable upon exercise of warrants evidencing the right to purchase
shares of Common Stock.
(5) This amount was previously paid.
(6) $32.84 of this amount was paid with the previous filings of this
Registration Statement. An additional fee of $11.47 is paid herewith to cover
an additional 55,000 shares of Common Stock.
(7) $555.54 of this amount was paid with the previous filings of this
Registration Statement An additional fee of $196.90 is paid herewith to cover
an additional 675,000 shares of Common Stock.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the securities act of 1933 or until the registration
statement shall become effective on such date as the commission, acting
pursuant to said section 8(a), may determine.
<PAGE>
4,472,500 SHARES OF COMMON STOCK
AMERICAN TECHNOLOGIES GROUP INC.
The 4,472,500 shares of common stock being offered by this prospectus
are being offered by the holders of 700,000 shares of common stock,
$1,600,000 principal amount of convertible debentures and the holders of
212,500 warrants to purchase common stock. See "Selling Securityholders" on
page 15.
The selling securityholders may offer these shares from time to time
in transactions on the OTC Bulletin Board or in privately negotiated
transactions as described under the "Plan of Distribution" on page 18. We will
not receive any of the proceeds.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"ATEG." On March 1, 1999, the closing sale price of the common stock on the
OTC Bulletin Board was $0.52.
INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is March 3, 1999.
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TABLE OF CONTENTS
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Page
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ABOUT AMERICAN TECHNOLOGIES...............................4
Business Summary...................................4
Current Financing..................................6
Proposed Merger with Commodore Separation
Technologies, Inc..................................6
RISK FACTORS..............................................7
Financial Risk Factors....................................7
We Have a History of Losses Which Will
Likely Continue Through the End of the
Current Fiscal Year................................7
We have Experienced Substantial Difficulty
Generating Sufficient Working Capital and
If We Do Not Receive Additional Money by
April 1999 We Will Not be Able to Continue
to Operate.......................................8
Our Sales of Securities Convertible into
Common Stock at a Discount to the Market
Price May Cause the Market Value of Our
Common Stock to Drop.............................8
Lack of Listing on a Major Exchange May Make
It Difficult for Investors to Dispose of
Our Common Stock.................................9
We May become a Penny Stock Resulting in
Reduced Willingness of Broker-Dealers
To Trade Our Common Stock........................9
We May Not Have Sufficient Funds With Which
to Operate.......................................9
Business Risk Factors....................................10
We May Not Find Customers for Our Products........10
The Scientific Community May Not Provide
Sufficient Validation of Our Products to
Encourage Sales.................................11
There May Be Unforeseen Regulatory Requirements
which Impede the Marketing and Sale of
our Products....................................11
We May Not Be Able to Obtain the Patents or
Trademarks Needed to Protect The Value
of Our Technologies.............................11
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2
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<TABLE>
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION......................13
FORWARD-LOOKING STATEMENTS...............................14
USE OF PROCEEDS FROM SALE OF COMMON STOCK................14
USE OF PROCEEDS FROM SALE OF DEBENTURES..................14
USE OF PROCEEDS FROM EXERCISE OF WARRANTS................14
SELLING SECURITYHOLDERS..................................15
PLAN OF DISTRIBUTION.....................................18
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES...........20
EXPERTS..................................................20
LEGAL MATTERS............................................20
</TABLE>
<PAGE>
ABOUT AMERICAN TECHNOLOGIES
Business Summary
American Technologies develops and sells products based upon on our
patented and proprietary technologies. The goal of our efforts is to develop
products that have a positive impact on the environment. Our address and
telephone number are: 1017 South Mountain Avenue, Monrovia, California
91016, (626) 357-5000.
We concentrate on technology discovery and development efforts in
three areas:
I(E)-TM- Technology
Water Purification
Particle Beams
Our I(E) Technology refers to a proprietary process which produces
water solutions containing water clusters that are stable at room
temperature. The clusters are groups of water molecules configured in such a
way so as to produce relatively large plus/minus polarity. We believe this
polarity is what gives the clusters their catalytic properties. We can
produce different kinds of water solutions for different applications.
Tests indicate that these water clusters improve the performance of
various chemical, physical and biological processes, including combustion
enhancement, descaling, enzyme processes and de-coking. For example, in
internal combustion engines the clusters attract hydrocarbon and oxygen
resulting in a more complete burning of the fuel. This results in improved
efficiency and reduced carbon deposits in the combustion chamber. In certain
biological applications related to enzyme production, the clusters have been
shown to significantly improve enzyme yield.
Independent researchers observe these water clusters by different
standard research tools including:
Laser autocorrelation
Electron microscope
Atomic force microscope
UV spectroscopy
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American Technologies sells these water solutions for use in several
product lines including household cleaning products and cosmetics. We also
use them in our combustion enhancers.
During the fiscal year ended July 31, 1998, revenue from the sale of
these water solutions for use in products manufactured by others was
approximately $117,000 and revenue from the sale of The Force-Registered
Trademark- combustion enhancer was $591,000. During the same period,
American Technologies had incurred net losses of approximately $9.64 million.
If we do not sell any additional securities and sales do not increase
significantly, we will be out of money by April, 1999.
Kinetics Technology International Corporation has conducted field tests on
the use of I(E) Technology as a coke formation suppresser. Kinetics
Technology has funded the testing and, if the testing is successful, will
have financial responsibility for commercialization of the final product.
There can be no assurance
<PAGE>
that the I(E) Technology can suppress coke formation and whether, if it does
do so, if it does so in a commercially viable manner.
In the water purification area, our low pressure vacuum distillation
system is undergoing tooling design for a home use version for introduction
to the marketplace in mid-1999. Our vacuum distiller utilizes a proprietary
method to provide the advantages of vacuum distillers without the need for
expensive and noisy vacuum pumps.
Under our agreement with Sunpentown, Ltd. for the tooling design and
manufacturing of the distiller, they are responsible for all design costs and
the cost of producing the tooling. Our marketing plan for the distiller
involves establishing relationships with distributors experienced in this
type of product. We do not anticipate incurring significant marketing costs
for this product.
The third technology is the particle beam project which produces a
beam of heavy particles. As a beam of particles, it functions in much the
same way as the common laser. The important difference is that it is
composed of heavy particles rather than light.
The development of the particle beam is being conducted through an
American Technologies sponsored research program with the California
Institute of Technology. The development of this technology is likely to
require a minimum of three to five years and expenditure of substantial sums
of money, likely to be in excess of $10,000,000, on research and development.
We submitted a proposal to the Department of Energy for a $5,000,000 joint
venture grant to produce a small pilot plant based on the current prototype
located at CalTech. The proposal describes the potential of our particle
beam to turn harmful nuclear waste into harmless components. The DOE is
reviewing the proposal.
Dr. Lo, our Director of Research and Development, has developed
certain particle beam theories. According to these theories, the proposed
particle beam may be able to break down molecules or even atoms and their
nuclei, or be used for rock drilling, medical surgery or precision cutting of
metals without distortion or excessive heat. No evidence exists to
substantiate these potential applications.
Current Financing
From October, 1998, through February, 1999, we sold to 8 investors
$1,600,000 principal amount of debentures in a private placement. In
connection with the sale of the debentures we are obligated to register with
the SEC within 90 days the shares of common stock issuable on conversion of
the debentures and exercise of the warrants issued with the debentures. If the
registration statement is not declared effective by the SEC within this 90
day period, we must pay liquidated damages to the investors. For the first 30
days we are late the damages are 2% of the principal amount invested.
Starting 120 days after the purchase of the debentures the damages are 3% per
month. Through February 28, 1999, we have incurred approximately $10,300 in
liquidated damages.
We are currently negotiating for a commitment from International
Investment Group to provide additional financing in the amount of up to
$5,000,000. The specific structure and terms of the financing is undetermined
at this time. Further, in connection with the proposed merger of American
Technologies with Commodore Separation Technologies, Inc., we may receive
certain bridge financing in the amount of $1,300,000. There can be no
assurance that we will obtain the commitment from International Investment
Group or complete the merger with Commodore and receive the bridge financing.
Proposed Merger with Commodore Separation Technologies, Inc.
We recently signed a letter of intent which effectuates our acquisition
of Commodore Separation Technologies, although the transaction is structured
as a merger. Commodore Separation Technologies is commercializing a
proprietary separation technology and recovery system known as SLiM -TM-. SLiM
stands for Supported Liquid Membrane. SLiM can selectively remove from water
valuable substances for reuse or toxic materials for safe disposal.
If the transaction is completed as proposed, the existing shareholders
of American Technologies would own approximately 80.1 percent of the
surviving company and the shareholders of Commodore Separation Technolgies
would own approximately 19.1 percent of the surviving company. In addition,
the Commodore Separation Technologies shareholders will receive one third of
the after tax profit of the existing business of Commodore Separation
Technologies.
One of the conditions to the completion of the merger is our receipt
of $1.3 million in net proceeds from bridge financing and a proposal for
permanent financing of $7 million. Specific sources and terms for these
financings have not been determined although negotiations are ongoing with
several sources of funds.
4
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.
If any of the following risks actually occur, our business, financial condition
or results of operations could be materially adversely affected. In such case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.
Financial Risk FACTORS
WE HAVE A HISTORY OF FINANCIAL LOSSES WHICH WILL LIKELY CONTINUE THROUGH
THE END OF THE CURRENT FISCAL YEAR.
We have operated at a loss throughout our history. Net losses for the
fiscal year ended July 31, 1998 were approximately $9.44 million. Net losses
for the fiscal year ended July 31, 1997 were approximately $9.64 million. At
July 31, 1998 we had an accumulated deficit of $36.56 million.
While we anticipate that we will reduce the level of our operating losses by
the end of the fiscal year ending July 31, 1999, there can be no guarantees
that this will occur. The amount of net losses and the time required to
reach profitability are uncertain. There can be no assurance that we will
ever be able to generate sufficient revenue from our products now ready for
market or those under development to achieve profitability on a sustained
basis. See the Management's Discussion and Analysis section of Amendment No.
2 to our Form 10-KSB/A.
WE HAVE EXPERIENCED SUBSTANTIAL DIFFICULTY GENERATING SUFFICIENT WORKING
CAPITAL AND IF WE DO NOT RECEIVE ADDITIONAL MONEY BY APRIL, 1999 WE WILL NOT
BE ABLE TO CONTINUE TO OPERATE
American Technologies has been experiencing difficulty in maintaining
sufficient working capital needed to insure stability and continued
existence. Only a small portion of the capital expended to date has come
from actual revenue generation, and we find it increasingly difficult to
raise investment capital. We are at a critical juncture in our history. It
is absolutely essential to begin to generate significant revenues in order to
maintain our existence. While plans are in place and being executed directed
at accomplishing this end, there can be no guarantee that these plans will
prove to be successful.
5
<PAGE>
Our monthly operating expenses are approximately $330,000. If we do not
sell any additional securities and sales do not increase significantly, we will
be out of money by April, 1999.
Our auditors' report on our financial statements for the fiscal year ending
July 31, 1998 contains an explanatory paragraph indicating that there were
operating losses which raised substantial doubt about the ability of American
Technologies to continue as a going concern. This going concern
qualification may adversely affect our perception by prospective customers
and suppliers.
OUR SALES OF SECURITIES CONVERTIBLE INTO COMMON STOCK AT A DISCOUNT TO THE
MARKET PRICE MAY CAUSE THE MARKET VALUE OF OUR COMMON STOCK TO DROP
As a result of our poor financial condition, several times over the past
few years we have sold securities that are convertible into our common stock at
a discount to the market price for the common stock. This has resulted in the
issuance of a significant amount of additional shares of common stock at prices
below market. It is possible that this method of financing operations has
contributed to the decline in the market price of the common stock. If we need
to obtain financing in the future in the same manner, this may again have an
adverse affect on the market price for our common stock.
The terms and structure of up to an additional $5,000,000 in financing
currently under discussion with the International Investment Group are not
yet determined. The completion of this financing may have an adverse affect
on the market price for the common stock.
6
<PAGE>
LACK OF LISTING ON A MAJOR EXCHANGE MAY MAKE IT DIFFICULT FOR INVESTORS
TO DISPOSE OF OUR COMMON STOCK.
Our common stock is quoted on the OTC Bulletin Board system. The OTC
Bulletin Board generally supports quotations for companies that do not meet
the NASDAQ SmallCap Market listing requirements. As a result, investors may
find it more difficult to dispose of or to obtain accurate price quotations
of our common stock than they would if the stock were quoted on the SmallCap
Market. In addition, quotation on the bulletin board depends on the
willingness of broker-dealers to make a market in our common stock. There
can be no assurance that the stock will continue to be quoted on the bulletin
board or that there will continue to be a market for the buying and selling
of our common stock.
There are currently 15 firms making a market in our common stock. The
firms are:
J. Alexander Securities, Inc. Knight Securities, L.P.
Wm. V. Frankel & Co., Incorporated Sharpe Capital, Inc.
Speer, Leeds & Kellogg Capital Markets Sherwood Securities Corp.
Hill Thompson Magid & Co. Inc. Wien Securities Corp.
Herzog, Heine, Geduld, Inc. Wilson-Davis & Co., Inc.
North American Institutional Brokers Mayer & Schweitzer, Inc.
M. H. Meyerson & Co., Inc. GVR Company
USCC Trading/A Division of
Fleet Securities
<PAGE>
WE MAY BECOME A PENNY STOCK RESULTING IN REDUCED WILLINGNESS OF
BROKER-DEALERS TO TRADE OUR COMMON STOCK
If our net tangible assets fall below $2 million at July 31, 1999 or if we
otherwise fail to meet certain criteria of the Commission, the common stock
becomes subject to so-called "penny stock" rules that impose additional sales
practice and market making requirements on broker-dealers who sell and/or
make a market in such securities. These rules may discourage the ability or
willingness of broker-dealers to sell and/or make a market in our common
stock.
WE MAY NOT HAVE SUFFICIENT FUNDS WITH WHICH TO OPERATE
We expect that our current cash, existing financing agreements and minimum
expected sales revenue will be sufficient to fund our operations through
April, 1999. During this time it is essential that we obtain additional
financing or be successful in the commercialization of our products, and
there is no guarantee that this will occur. Revenues during the fiscal year
ended July 31, 1998 were approximately $916,700 and revenues for the quarter
ended October 31, 1998 were approximately $166,000. In order to achieve
viability, management currently estimates that revenues will have to increase
to at least $4.2 million annually, based upon our anticipated working capital
and cash flow requirements. We believe that this minimum level of sales will
not be sufficient to achieve current profitability, but will allow us to
continue operations without obtaining immediate additional debt or equity
financing.
Our exact future capital requirements depend on numerous factors, including
the amount of revenues generated from operations, cost of sales and marketing
activities and the progress of our research and development activities. We
are currently negotiating for a commitment from International Investment
Group to purchase additional debentures in the aggregate principal amount of
up to $5,000,000. There can be no assurance that such funding will be
available on acceptable terms, or at all, when it is required. If additional
funding is not available when needed, it is possible that we would have to
reduce or suspend operations, seek an acquisition partner, or sell securities
on terms that might be highly dilutive or otherwise disadvantageous to
investors.
BUSINESS RISK FACTORS
As American Technologies is engaged in the development and marketing of
products based on new technologies, there are significant risks associated
with its potential success.
7
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WE MAY NOT FIND CUSTOMERS FOR OUR PRODUCTS
None of our current products enjoy widespread distribution or customer
acceptance. While we do have a number of products that are past the
development stage, we have yet to establish major, stable markets for them.
Although we believe we have the expertise to commercialize these products,
any or all of our products may fail to prove to have widespread customer
appeal. Various marketing strategies and alliances are now in place. To
assist in the marketing of The Force and other products we have established a
relationship with Comtrad Industries. The marketing of certain household
cleaning products and cosmetics containing I(E) water solutions is being
conducted by 21st Century Global Network, LLC. We are a founding member of
21st Century. Kinetics Technology is doing the field tests, and if
successful, will market an I(E) water solution product as a coke formation
suppressor.
THE SCIENTIFIC COMMUNITY MAY NOT PROVIDE SUFFICIENT VALIDATION OF OUR
PRODUCTS TO ENCOURAGE SALES
Our technologies have not received broad acceptance by the general scientific
community. To a great extent, scientific validation of our technologies is
essential to acceptance of the products by the marketplace. Historically,
the scientific community has been resistant to new ideas and technologies,
and, although we believe that we have been successful in establishing working
relationships with many scientists at prestigious academic institutions,
there is no guarantee that this will lead to acceptance of our technologies
by the scientific community as a whole. Failure to achieve such acceptance
could be materially detrimental to our efforts to establish markets for our
products.
THERE MAY BE UNFORSEEN REGULATORY REQUIREMENTS WHICH IMPEDE THE MARKETING AND
SALE OF OUR PRODUCTS
Most of our current products are being sold directly to the consumer in
markets that are not generally regulated by government agencies. In the case of
consumer products for enhancing engine performance, such as The Force or the
F420 fuel
8
<PAGE>
additive, registration of these products with CARB (California Air Resources
Board) and EPA (Environmental Protection Agency) is required and has been done.
Since the F420 additive's chemical contents fall within the restrictions
of the EPA regulations, there are no known impediments to maintaining this
registration. We have also registered The Force airborne combustion enhancer as
an add-on device with CARB. There is no known reason why CARB would withdraw
that registration.
In the case of bulk fuel additives, there are strong industry
regulations. Extensive testing is required to meet these industry regulations
prior to sale of the additive and there is no guarantee that our bulk additive
products can meet all of these industry regulations.
WE MAY NOT BE ABLE TO OBTAIN THE PATENTS OR TRADEMARKS NEEDED TO PROTECT THE
VALUE OF OUR TECHNOLOGIES
Our success will depend, in part, on whether we can obtain patent and
trademark protection for our technologies and products. We cannot guarantee
that we will be able to secure these protections. If we fail to do so, there is
no guarantee that our technologies will not be subject to copying by other
entities. This would result in a level of competition which could well prevent
us from being successful. Although we have taken steps, including entering into
confidentiality agreements with our employees and third parties to protect our
trade secrets and unpatented know-how, other third parties may still be able to
obtain such information.
We have applied for a number of patents on our particle beam and I(E)
technologies. Some have been approved. The status is as follows:
- Particle Beam Approved Patents
There are 8 approved U.S. patents and 9 foreign patents issued on particle beam
technology. There are 3 additional U.S. patent applications pending.
- I(E) Technology
There is 1 granted U.S. patent, not yet issued, on the I(e) Technology and 10
other U.S. patent applications in various stages of prosecution.
- Vacuum Distiller
There are 3 U.S. patent applications pending on the vacuum distiller technology.
Foreign applications to protect the
9
<PAGE>
technology are also in process. No patents have been granted yet.
All of our products currently offered for sale are protected by patents
in the U.S. The group of patent applications currently in process have
sufficient overlap to offer protection to our current commercial applications.
We file applications with the U.S. Patent and Trademark Office once we perceive
a new significant commercial application, and prior to public disclosure of the
application.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from our web site at www.ateg.com or at the SEC's web site at www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling securityholders sell all the shares.
This prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-6827).
The following documents are hereby incorporated by reference in this
Registration Statement:
- Annual Report on Form 10-KSB for the year ended July 31, 1998.
- Amendment Number 1 to our Annual Report on Form 10-KSB/A for the year
ended July 31, 1998.
- Amendment Number 2 to our Annual Report on Form 10-KSB/A for the year
ended July 31, 1998.
- Quarterly Report on Form 10-QSB for the three months ended
October 31, 1998.
- Amendment Number 1 to our Quarterly Report on Form 10-QSB/A for the
three months ended October 31, 1998.
- Current Report of Form 8-K dated January 5, 1999.
10
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- The section of our Registration Statement on Form 10, filed on January
24, 1994, entitled "Description of Securities," as amended by Amendment
Nos. 1, 2, 3 and 4.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Corporate Secretary
American Technologies Group, Inc.
1017 South Mountain Avenue
Monrovia, California 91016
(626) 357-5000
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The selling securityholders will not
make an offer of these shares in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of such documents.
FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this prospectus and in the
documents that are incorporated by reference. Forward-looking statements are
subject to risks and uncertainties and include information concerning possible
or assumed future results of our operations. When we use words such as
"believes," "expects," "anticipates" or similar expressions, we are making
forward-looking statements. You should note that an investment in our
securities involves certain risks and uncertainties that could affect our future
financial results. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in "Risk Factors" and elsewhere in this prospectus.
USE OF PROCEEDS FROM SALE OF COMMON STOCK
American Technologies will not receive any of the proceeds from the sale
of the shares of common stock by the selling security holders.
USE OF PROCEEDS FROM SALE OF DEBENTURES
We have received $1,600,000 from the sale of the debentures.
11
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We have used and will continue to use the net proceeds from the sale of the
debentures for working capital and the payment of existing liabilities.
USE OF PROCEEDS FROM EXERCISE OF WARRANTS
If all of the warrants are exercised, we will receive $159,375. We
intend to use these funds for working capital and the payment of existing
liabilities.
SELLING SECURITYHOLDERS
Selling Securityholders
The following table identifies certain selling securityholders along
with the principal amount of debentures and the number of warrants they own.
<TABLE>
<CAPTION>
Principal
AMOUNT OF NUMBER OF
NAME DEBENTURES WARRANTS
---- ---------- ---------
<S> <C> <C>
International Investment $ 200,000 20,000
Group Equity Fund, NV
Venezuela Recovery Fund $ 50,000 5,000
Britannia Associates Limited $ 375,000 37,500
JRT Holdings $ 25,000 2,500
Cinzia Santa Rossa $ 250,000 25,000
Intermediazioni $ 50,000 5,000
Internazionali S.A.
Spiga Limited $ 100,000 62,500
Gaines P. Campbell, Jr. $ 550,000 55,000
</TABLE>
12
<PAGE>
Conversion of Debentures
The selling securityholders may convert or exchange their debentures
for shares of our common stock by giving written notice to us. $1,050,000 of
the debentures are convertible at a variable conversion price depending upon
the market price for our common stock on the date of conversion. There is a
maximum conversion price of $0.62 but no minimum conversion price. $250,000
of debentures have a fixed conversion price of $0.58 and $300,000 of
debenture have fixed conversion price of $0.50.
Variable Conversion Price
The variable conversion price is the lesser of
$0.62; or
75% of the average closing bid price for the common stock during the five
trading days ending one day prior to conversion of the debenture.
Estimate of Shares Issuable Upon Conversion
If all of the debentures were converted on February 26, 1999, the
variable conversion price would be $0.414 and the total number of shares of
common stock issued would be 3,567,267. This does not include any shares of
common stock issued as interest due on the debentures. $1,050,000 in
principal amount of the debentures bear interest at 6% per annum and $550,000
in principal amount of the debentures bear interest at 3% per annum.
The following table contains the names of the selling securityholders,
the number of shares of common stock owned beneficially by each of the
selling securityholders as of February 26, 1999, and the number of shares
which may be offered for resale under this prospectus. For the purpose of
stating the number of shares of common stock beneficially owned by the
selling securityholders in the following table, the number of shares of
common stock calculated to be issuable in connection with the conversion of
the debentures assumes the debentures were converted on February 26, 1999.
This calculation results in an estimate of the number of shares of common
stock issuable upon conversion of the debentures.
The information included in the following table is based upon
information provided by the selling securityholders. Because the selling
securityholders may offer all, some or none of their common stock, no
definitive estimate as to the number of shares that will be held by the
selling securityholders after the offering can be provided and the following
table has been
13
<PAGE>
prepared on the assumption that all shares of common stock offered under this
prospectus will be sold.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
BENEFICIALLY SHARES OF BENEFICIALLY
NAME AND OWNED PRIOR TO COMMON STOCK OWNED AFTER
ADDRESS OFFERING (1)(2) BEING OFFERED OFFERING (3)
- ------- --------------- ------------- -------------
<S> <C> <C> <C>
Int'l Investment (4) 398,788 398,788 0
Group Equity Fund
Venezuela Fund (4) 99,697 99,697 0
Britannia Associates(4) 747,727 747,727 0
JRT Holdings 49,848 49,848 0
c/o Astor Capital
9300 Wilshire Blvd.,
Suite 308
Beverly Hills, CA 90212
Cinzia Santa Rossa 498,485 498,485 0
Via Martiri/
Villa Liberta 45
Prato di Pordenone 33080
Pordenone, Italia
Intermediazioni 99,697 99,697 0
Internazionali S.A.
Pasea Estate, Road Town
Tortola BVI
Spiga Ltd. 251,894 251,894 0
Skelton Building
Road Town, Tortola BVI
Gaines P. Campbell, Jr. 1,031,034 1,031,034 0
1341 Birmingham Highway
Chattanoga, TN 37419
MacLaughlin Trade Development 500,000 500,000 0
5263 Heather Lane
Park City, Utah 84098
Born Enterprises 300,000 200,000 100,000
60 S.E. 6th Avenue
Delray Beach, FL 33483
</TABLE>
(1) Each of the parties listed has sole voting and investment power for all
of the shares of common stock indicated.
(2) As required by the regulations of the SEC, the number of shares shown as
beneficially owned includes shares which can be purchased within 60 days
after February 4, 1999. The actual number of shares shown is subject to
adjustment and could be materially less or more than the estimated amount
indicated depending upon factors which we cannot predict such as the market
price of the common stock on the actual date of conversion of the debentures.
(3) Assumes the sale of all shares offered.
(4) The address of each of these selling securityholders is c/o
International Investment Group, 17 State Street, NY, NY 10004
14
<PAGE>
Registration Rights
The subscription agreements for the sale of the debentures require us
to register with the SEC the public offering of the shares of common stock
issuable on conversion of the debentures and exercise of the warrants. We
are also obligated to register and qualify the shares under such state
securities laws as the selling securityholders may request.
We are obligated to use our best efforts to cause the registration
statement to become effective and to keep the registration statement
effective for two years or until the selling securityholders may sell all
registerable securities under Rule 144 or until the debenture holders no
longer own any shares, whichever occurs first.
The subscription agreements provide for liquidated damages to the
debenture holders if we are unable to have the registration statement
declared effective by the SEC within 90 days from the date of sale of the
debentures. We have passed this deadline as to $650,000 in principal amount
of debentures. The amount due in liquidated damages is $10,300 payable in
cash or common stock valued at the lower of current market value or $0.62.
In connection with our private placement of $1,600,000 principal
amount of debentures, we issued warrants to purchase 160,000 shares of Common
Stock to the debenture holders and warrants to purchase 52,500 shares of
common stock to Spiga Ltd., our selling agent, at $0.75, all for a period of
5 years. Spiga also purchased $100,000 principal amount of debentures.
PLAN OF DISTRIBUTION
The selling securityholders may offer the shares of common stock received
upon conversion of the debentures or exercise of the warrants at various times
in transactions:
- in the over-the-counter market;
- on any exchange where our common stock is then listed;
- with broker-dealers or third parties other than in the over-the-counter
market or on an exchange, including block sales; or
- involving a combination of such methods or other methods.
15
<PAGE>
The selling securityholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, at fixed prices or at a combination of such
prices.
The selling securityholders may use dealers, agents or underwriters to
sell their shares. If this happens, the dealers, agents or underwriters may
receive compensation in the form of discounts or commissions from the selling
securityholders or from the purchasers of shares or from both. The compensation
to a particular broker may be in excess of customary compensation.
The selling securityholders and any dealers, agents or underwriters that
participate with the selling securityholders in the distribution of the shares
may be deemed to be "underwriters" as this term is defined in the Securities
Act. Any commissions paid or any discounts or concessions allowed to any such
persons, and any profits received on the resale of the shares of our common
stock offered by this prospectus, may be deemed to be underwriting commissions
or discounts under the Securities Act.
Broker-dealers may agree with a selling securityholder to sell a
specified number of shares at a stipulated price, and, to the extent the
broker-dealer is unable to do so acting as agent for the selling
securityholder, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer's commitment to the selling
securityholder. Broker-dealers who acquire shares as principal may
thereafter resell the shares in transactions on the OTC Bulletin Board, in
negotiated transactions or otherwise at market prices prevailing at the time
of sale or at negotiated prices. These transactions may involve crosses and
block transactions or sales to and through other broker-dealers. In
connection with these resales broker-dealers may pay to or receive
commissions from the purchasers of the shares.
We will pay most expenses related to the offer and sale of the shares
offered by the selling securityholders using this prospectus. The selling
securityholders, however, will pay any underwriting discounts and selling
commissions and the fees of their own attorneys.
Any shares covered by this prospectus which qualify for sale under
Rule 144 of the Securities Act may be sold under that Rule rather than under
this prospectus.
16
<PAGE>
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Amended Bylaws provide that we shall indemnify our directors and officers to
the fullest extent permitted by Nevada law, including circumstances in which
indemnification is otherwise discretionary under Nevada law.
In addition, American Technologies and each selling securityholder have agreed
to indemnify each other against certain liabilities, including certain
liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons, we been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
EXPERTS
Our audited financial statements as of and for the years ended July 31, 1998
and 1997 incorporated by reference in this prospectus and elsewhere in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and
are incorporated herein by reference in reliance upon the authority of said
firm as experts in giving said reports. Reference is made to said report,
which includes an explanatory paragraph with respect to the uncertainty
regarding our ability to continue as a going concern as discussed in Note 1
to the financial statements.
LEGAL MATTERS
For the purpose of this offering, John M. Dab, our General Counsel, is
giving his opinion on the validity of the shares.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
SEC Registration Fee $ 752.44
Accountant's Fees and Expenses $ 6,000.00
Financial Printers $ 4,000.00
Miscellaneous $ 500.00
Total $11,252.44
----------
----------
</TABLE>
- ----------------
* Represents expenses relating to the distribution by the selling
securityholders under this prospectus prepared in accordance with the
requirements of Form S-3. These expenses will be borne by us on behalf of
the selling securityholders. All amounts are estimates except for the SEC
Registration Fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 78.751 of the Nevada General Corporation Law,
Article VI of our Amended Bylaws provides for the indemnification by American
Technologies, including suits brought by or on behalf of American Technologies,
of each director, officer, employee or agent thereof to the fullest extent
permitted by Nevada law.
As permitted by the Nevada General Corporation Law and Article VI of our
Amended Bylaws, maintains director's and officer's liability for its directors
and officers against certain liabilities.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Numbers Description
- ------- -----------
<S> <C>
4.1 Form of 6% Convertible Debenture issued to certain Selling
Securityholders. (1)
4.2 Form of Warrant issued to certain Selling Securityholders. (1)
4.3 Form of 3% Convertible Debenture issued to a Selling
Securityholder. (2)
5.1 Opinion of John M. Dab.
23.1 Consent of John M. Dab (included in Exhibit 5.1).
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (1)
</TABLE>
- ---------------
(1) Previously filed as an exhibit to the Company's Registration
Statement on Form S-3 filed with the Securities and Exchange Commission
on December 3, 1998.
(2) Previously filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on February 10, 1998.
ITEM 17. 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 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.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at the 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) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be an initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Nevada Revised Statutes, the Certificate of
Incorporation of the Registrant, the Bylaws of the Registrant, Indemnification
Agreements entered into between the Registrant and it officers and directors, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such
19
<PAGE>
indemnification is against public policy as expressed in the Securities 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 the controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of the such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Monrovia, State of California, on this 2nd day of
March, 1999.
AMERICAN TECHNOLOGIES GROUP, INC.
By: /s/Lawrence J. Brady
-------------------------
Lawrence J. Brady
Chairman of the Board and
Chief Executive Officer
20
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Lawrence J. Brady Chairman of the Board, March 2, 1999
- -------------------------- Chief Executive Officer
Lawrence J. Brady
/s/Harold Rapp Chief Operating Officer March 2, 1999
- -------------------------- Treasurer (Principal
HAROLD RAPP Financial and Accounting
Officer)
/s/Shui Yin Lo Director of Research and March 2, 1999
- -------------------------- Development and a Director
SHUI YIN LO
/s/Charles McCarthy* Director March 2, 1999
- --------------------------
CHARLES MC CARTHY
/s/William Odom* Director March 2, 1999
- --------------------------
WILLIAM ODOM
- -------------------------- Director
TERRY WACHSNER
*By: /s/Lawrence J. Brady
----------------------
Lawrence J. Brady
Attorney-in-Fact
</TABLE>
21
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Numbers Description
- ------- -----------
<S> <C>
4.1 Form of 6% Convertible Debenture issued to the Selling
Securityholders. (1)
4.2 Form of Warrant issued to the Selling Securityholders. (1)
4.3 Form of 3% Convertible Debenture issued to a Selling
Securityholders. (2)
5.1 Opinion of John M. Dab.
23.1 Consent of John M. Dab (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (1)
</TABLE>
- ---------------
(1) Previously filed as an exhibit to the Company's Registration
Statement on Form S-3 filed with the Securities and Exchange Commission
on December 3, 1998.
(2) Previously filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on February 10, 1999.
22
<PAGE>
EXHIBIT 5.1
March 3, 1999
Board of Directors
American Technologies Group, Inc.
1017 S. Mountain Ave.
Monrovia, California 91016
Gentlemen:
As General Counsel for American Technologies Group, Inc. (the
"Company"), in connection with the Registration Statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission on or about March 3, 1999 intended to register 3,560,000 shares of
the common stock of the Company issuable upon the conversion of $1,600,000
principal amount of its convertible debentures, 212,500 shares of common
stock of the Company issuable upon the exercise of its common stock purchase
warrants and an additional 700,000 shares of common stock (collectively, the
"Shares"), as more fully described in the Registration Statement, I have
examined such corporate records and other documents and such questions of law
as I have considered necessary or appropriate for the purposes of this
opinion and, on the basis of such examination, advise you that in my opinion
the Shares will be, when issued as specified in the Registration Statement,
validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. This consent is not to be construed as an admission
that I am a person whose consent is required to be filed with the Registration
Statement under the provisions of the Securities Act of 1933, as amended.
Very truly yours,
/s/ John M. Dab
John M. Dab
General Counsel
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Technologies Group, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 registration statement of our report dated
November 10, 1998 included in the Company's Form 10-KSB for the year ended
July 31, 1998 and to all references to our Firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Los Angeles, California
March 3, 1999
