<PAGE>
This filing is made pursuant to Rule 424(b)(3) under the
Securities Act of 1933 in connection with Registration No. 333-96195
PROSPECTUS
4,960,870 SHARES OF COMMON STOCK
AMERICAN TECHNOLOGIES GROUP INC.
The 4,960,870 shares of common stock being offered by this prospectus
are being offered by certain selling securityholders. See "Selling
Securityholders" on page 16.
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 19. We will not receive
any of the proceeds from this offering.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"ATEG." On February 11, 2000, the closing sale price of the common stock on the
OTC Bulletin Board was $0.47.
INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 8.
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 February 14, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT American Technologies ...................................................................................4
Business Summary .........................................................................................4
Current Financing ........................................................................................6
Proposed Merger with Commodore Separation Technologies Inc ...............................................7
RISK FACTORS ..................................................................................................8
Financial Risk Factors ........................................................................................8
We have a History of Losses Which Will Continue Through
the End of the Current Fiscal Year ...................................................................8
We have Experienced Substantial Difficulty Generating Sufficient Working
Capital ..............................................................................................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 ..................................9
Lack of Listing on a Major Exchange May Make It Difficult for Investors to
Dispose of Our Common Stock .........................................................................10
Because Our Common Stock is a "Penny Stock," Trading in it is Subject to
the Penny Stock Rules Which Could Affect Your Ability to Resell the
Stock in the Market .................................................................................10
Business Risk Factors ........................................................................................11
We May Not Find Customers for Our Products ..............................................................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 .......................................................................12
WHERE YOU CAN FIND MORE INFORMATION ..........................................................................14
FORWARD-LOOKING STATEMENTS ...................................................................................15
</TABLE>
2
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<TABLE>
<S> <C>
DESCRIPTION OF COMMON STOCK ..................................................................................15
USE OF PROCEEDS FROM SALE OF COMMON STOCK ....................................................................16
USE OF PROCEEDS FROM SALE OF DEBENTURES ......................................................................16
USE OF PROCEEDS FROM EXERCISE OF WARRANTS ....................................................................16
SELLING SECURITYHOLDERS ......................................................................................16
PLAN OF DISTRIBUTION .........................................................................................19
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES ...............................................................20
EXPERTS ......................................................................................................21
LEGAL MATTERS ................................................................................................21
</TABLE>
3
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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:
- IE-TM- (Catalyst) Technology
- Water Purification
- Particle Beams
Our IE (Catalyst) 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 hydrocarbons and oxygen resulting in a
more complete burning of the fuel. This results in improved efficiency and
reduced carbon deposits in the combustion chamber.
Independent researchers observe these water clusters by different
standard research tools including:
- Laser autocorrelation
- Electron microscope
- Atomic force microscope
- UV spectroscopy
4
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American Technologies sells these water solutions for use in several
product lines including household cleaning products. We also use them in our
combustion enhancers.
Our laboratory results on various applications of our IE (Catalyst)
Technology to combustion have been confirmed by independent tests conducted by a
variety of potential customers. These tests include positive results in a gas
turbine electric generation power plant, successful testing by a foreign company
of the combustion catalyst with ethanol directly into gasoline, and positive
results over five months of testing at a diesel electric power generation
facility in China.
During the fiscal year ended July 31, 1999, revenue from the sale of
these water solutions for use in products manufactured by others was nominal
and revenue from the sale of The Force-Registered Trademark- combustion
enhancer was $248,000. During the same period, American Technologies had
incurred net losses of approximately $10.8 million.
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 the spring of 2000. Our vacuum distiller utilizes a
proprietary method to provide the principal advantage of vacuum distillers -
boiling water at low temperatures which avoids mineral deposits and scaling -
without the need for expensive and noisy vacuum pumps. We are currently
soliciting bids for the manufacturing of the distiller.
The third technology is the particle beam project which produces a beam
of heavy particles. The development of the particle beam has been 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 $6,000,000 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 has reviewed the proposal and
discussions are underway regarding funding of the project. The particle beam
project has been on hold pending receipt of significant funding to continue its
development
5
<PAGE>
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 or precision cutting of metals without distortion or excessive
heat. No evidence exists to substantiate these potential applications.
Current Financing
On January 14, 2000 we entered into a Securities Purchase Agreement
with two private investors, Bank Insinger De Beaufort N.V. and Connaught Global
Ltd., for the purchase of a total of $250,000 principal amount of convertible
debentures and warrants to purchase a total of 500,000 shares of our common
stock. The convertible debentures bear interest at the rate of seven percent per
year and are due on January 14, 2003. The debentures are convertible into common
stock at the lower of $0.23 per share and a Variable Conversion Price as
described on page 17 under the caption "Selling Securityholders - Variable
Conversion Price." The warrants are exercisable at the lower of $0.174 per share
and the Variable Conversion Price. We are obligated to register with the SEC
prior to April 13, 2000, 1.5 times the number of shares of common stock issuable
on conversion of the debentures and exercise of the warrants. If the
registration statement is not declared effective by the SEC within the required
period, we must make payments to the debenture holders at the rate of 2% of the
principal amount of the debentures per month.
Provided the trading price of our common stock is at least $0.15 during
the ten trading days prior to the effective date of the registration statement
of which this prospectus forms a part, the investors are each required to
purchase for $125,000 an additional $125,000 principal amount of debentures and
a warrant to purchase 250,000 shares of common stock, for an aggregate of
$250,000 in debentures and warrants to purchase 500,000 shares of common stock.
These additional debentures are convertible into common stock at the lower of
$0.345 per share and a variable conversion price. The additional warrants are
exercisable at the lower of (i) the average of the lowest three trading prices
during the ten trading days immediately prior to the date of exercise and (ii)
the lower of $0.23 and the average of the lowest three trading prices during the
ten trading days immediately prior to the date of issuance of the additional
warrants.
6
<PAGE>
Bristol Capital LLC acted as a finder for the sale of the $500,000
principal amount of debentures and the warrants. Bristol was paid a 10% cash
finder's fee and issued a warrant to purchase 50,000 shares of common stock.
Upon the payment for the second $250,000 principal amount of debentures
Bristol will receive an additional 10% cash fee and a warrant to purchase
50,000 shares of common stock. The 10% finder's fee also applies to any
proceeds received by American Technologies upon the exercise of warrants by
the selling securityholders. The terms of Bristol's warrants are the same as
the terms for the warrants issued to the investors at the same time.
We have also entered into a letter of intent with Bristol for the
establishment of a $12 million equity line of credit. The recent sale of the
debentures and the equity line of credit have replaced the prior financing
arrangements with First Liberty Securities, Ltd. and Security Capital Trading
Inc.
Proposed Merger with Commodore Separation Technologies Inc.
In February, 1999, we signed a letter of intent which contains terms
for 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.
Negotiations on the terms of the definitive acquisition agreement have
been temporarily deferred while we attempted to secure operating capital on
acceptable terms. As a result of the delay in finalizing the definitive
agreement, there can be no absolute assurance that a final agreement can be
reached with Commodore Separation Technologies along terms previously
negotiated. Under the most recent discussed terms of the agreement, American
Technologies will acquire all of securities of Commodore Separation Technologies
(approximately 87%) owned by Commodore Environmental Services Inc. in exchange
for 8% of the outstanding stock of the Company up to a value of $3,000,000.
7
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RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are the only
material risks facing us of which we are currently aware. 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 CONTINUE THROUGH
THE END OF THE CURRENT FISCAL YEAR
We have operated at a loss throughout our history. Net losses for the
three months ended October 31, 1999 were approximately 1.8 million and for the
fiscal year ended July 31, 1999 were approximately $10.8 million. Net losses for
the fiscal year ended July 31, 1998 were approximately $9.44 million. At October
31, 1999 we had an accumulated deficit of approximately $49 million.
Net cash used in operations declined by over $1.1 million from fiscal
1998 to fiscal 1999. We anticipate that we will be able to continue our reduced
cash out flow during fiscal 2000, except to the extent of expenses associated
with marketing and production of products. 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 from those under development to achieve profitability on a sustained
basis. See the Management's Discussion and Analysis section of our Form 10-KSB.
WE HAVE EXPERIENCED SUBSTANTIAL DIFFICULTY GENERATING SUFFICIENT WORKING CAPITAL
American Technologies has been experiencing difficulty in maintaining
sufficient working capital needed to ensure stability and continued existence.
Only a small portion of the capital expended to date has come from actual
revenue
8
<PAGE>
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 to accomplish this end, there can be no
guarantee that these plans will prove to be successful.
Our current cash monthly operating expenses are approximately $250,000.
We believe our current cash reserves plus the $250,000 due upon the
effectiveness of the registration statement of which this prospectus forms a
part, the $12 million equity line of credit to be obtained pursuant to a letter
of intent dated December 10, 1999, along with anticipated minimum projected
revenues of $2,000,000 for fiscal 2000, will be sufficient for us to operate in
the normal course for the next 12 months. However, if revenues are less than
projected or the equity line of credit is not finalized, our ability to continue
operations will be dependent upon additional financing activities, of which
there can be no assurance.
The report by Corbin & Wertz on our financial statements for the
fiscal year ended July 31, 1999 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.
9
<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 18 firms making a market in our common stock,
although there can be no assurance that any or all of them will continue to do
so in the future. The current market makers are:
M. H. Meyerson & Co., Inc. Knight Securities, L.P.
Wm. V. Frankel & Co., Incorporated Sharpe Capital, Inc.
Speer, Leeds & Kellogg Capital Markets Olsen Payne & Company
Hill Thompson Magid & Co. Inc. Wien Securities Corp.
Herzog, Heine, Geduld, Inc. Wilson-Davis & Co., Inc.
Phillip Louis Trading Co. Mayer & Schweitzer, Inc.
North American Institutional Brokers GVR Company
South Beach Securities Paragon Capital Corp.
Pacific Continental Securities Corp.
USCC Trading, a Division of Fleet Securities
BECAUSE OUR COMMON STOCK IS A "PENNY STOCK," TRADING IN IT IS SUBJECT TO THE
PENNY STOCK RULES WHICH COULD AFFECT YOUR ABILITY TO RESELL THE STOCK IN THE
MARKET.
The Securities Enforcement and Penny Stock Reform Act of 1990 imposes
restrictions when making trades in any stock such as our common stock which is
defined as a "penny stock." The SEC's regulations generally define a penny stock
as an equity security that has a price of less than $5.00 per share, other than
securities which are traded on markets such as the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market. As a result of being a penny
stock, the market liquidity for our common stock may be adversely affected since
the regulations on penny stocks could limit the ability of broker-dealers to
sell our common stock and thus your ability to sell
10
<PAGE>
our common stock in the secondary market. The regulations restricting trades in
penny stock include:
- a requirement that stock brokers deliver to their customers, prior to
any transaction involving a penny stock, a disclosure schedule explaining the
penny stock market and the risks associated with the penny stock market; and
- a requirement that broker-dealers who recommend penny stocks to
persons other than their established customers and a limited class of accredited
investors must make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction prior
to the sale of the securities.
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.
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. Current significant distributors
include Hungarofek and Market One.
THERE MAY BE UNFORESEEN 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 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
11
<PAGE>
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 in the United States. Extensive testing is required to meet these
industry regulations prior to domestic sale of the additive and there is no
guarantee that our bulk additive products can meet all of these industry
regulations.
Foreign markets have only recently begun to impose significant regulations on
the petroleum industry to lessen the industry's effect on the environment. With
less testing required for the sale of new products, we are able to introduce our
products in the market place quicker. We are therefore directing a substantial
marketing effort towards these foreign markets.
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, vacuum
distiller and IE catalyst technologies. Some have been approved. The status is
as follows:
- Particle Beam Approved Patents
We are maintaining 7 granted U.S. patents and 9 foreign patents issued
on particle beam technology. Additionally, there are 3 U.S. and 6
foreign patent applications pending.
- IE Catalyst Technology
We have been granted 1 U.S. patent on the Ie Technology and 7 U.S.
patent applications are in various stages of prosecution. Foreign
patent applications to protect this technology are also in progress.
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- Vacuum Distiller
We have been granted 1 U.S. patent on the vacuum distiller technology
and there are 2 U.S. patent applications pending. Foreign applications
to protect the technology are also in process.
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
technology.
13
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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. 333-96195).
The following documents are hereby incorporated by reference in this
Registration Statement:
- - Annual Report on Form 10-KSB for the year ended July 31, 1999.
- - Quarterly Report on Form 10-QSB for the three months ended October 31, 1999.
- - Current Report on Form 8-K dated August 30, 1999.
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.
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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.
DESCRIPTION OF COMMON STOCK
We have 100,000,000 shares of common stock authorized of which
36,884,178 shares are outstanding as of February 1, 2000. The holders of shares
of common stock are entitled to dividends when and as declared by the Board of
Directors from funds legally available therefore, and, upon liquidation, are
entitled to share pro rata in any distribution to holders of common stock. There
are no preemptive, conversion or redemption privileges, nor sinking fund
provisions with respect to the common stock, however, our Articles of
Incorporation, as amended, provide that "Each shareholder shall have the same
rights as any individual to purchase said stock [shares of Common Stock], but
shall not have any pre-emptive rights as that term is defined under NRS 78.265."
All of the outstanding shares of common stock are duly authorized, validly
issued, fully paid and non-assessable. Under Nevada law, the law of the state of
incorporation of American Technologies, and the our Articles of Incorporation,
each holder of a share of common stock is entitled to one vote for each matter
submitted for a vote. Additionally, under Nevada law cumulative voting is
allowed for the election of directors, if provided for in the Articles of
Incorporation. The our Articles of Incorporation do not provide for cumulative
voting. However, California law requires companies meeting certain requirements,
which we meet, to permit shareholders to elect to cumulate their votes for
directors.
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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 securityholders.
USE OF PROCEEDS FROM SALE OF DEBENTURES
To date, we have received $250,000 from the sale of the debentures and
within 15 days of the effected date of the registration statement we will
receive an additional $250,000.
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 for which the underlying shares of common stock
are included in this prospectus are exercised, we will receive a maximum of
$299,970 in net proceeds. 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>
Bank Insinger De Beaufort N.V. $ 250,000 500,000
Connaught Global Ltd. $ 250,000 500,000
Bristol Capitol LLC - 100,000
</TABLE>
In addition to the above selling debenture holders, MacCaughern Trade
Development is offering 50,000 shares of common stock.
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Conversion of Debentures and Exercise of Warrants
The above identified selling securityholders may convert or exchange
their debentures for shares of our common stock by giving written notice to us.
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 $0.23 as to $250,000 principal amount of debentures and a
maximum conversion price of $0.345 for the second $250,000 principal amount of
debentures. There is no minimum conversion price. The warrants as to 550,000
shares of common stock are exercisable at the lower of $0.174 per share and the
Variable Conversion Price. Warrants as to the remaining 550,000 shares of common
stock are exercisable at the lower of (i) the average of the lowest three
trading prices during the ten trading days immediately prior to the date of
exercise and (ii) the lower of $0.23 and the average of the lowest three trading
prices during the ten trading days immediately prior to the date the
registration statement is declared effective.
Variable Conversion Price
The Variable Conversion Price is the lesser of
- The maximum applicable fixed conversion or exercise price; or
- 72.5% of the average of the lowest three trading prices during the
ten trading days immediately prior to conversion of the debentures or
exercise of the warrants.
Estimate of Shares Issuable Upon Conversion
If the $500,000 principal amount of debentures were converted on
February 11, 2000, the variable conversion price would be in excess of the
maximum fixed conversion price and the total number of shares of common stock
issued would be 2,173,913. This does not include any shares of common stock
issuable as interest due on the debentures. The debentures bear interest at 7%
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 the date hereof, and the number of shares which may be
offered for resale under this prospectus. The number of shares set forth in the
table represents an estimate of the number of shares of common stock to be
offered by the selling securityholder. The actual number of shares of common
stock issuable upon conversion
17
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of the debentures and exercise of the warrants is indeterminate, is subject to
adjustment and could be materially different than such estimated number
depending on factors which cannot be predicted by us at this time, including
among other factors the future market price of the common stock.
The information included in the table below 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 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>
Bank Insinger 2,380,435 2,380,435 0
De Beaufort N.V.
Herengtecht 551
1017 BW Amsterdam
Connaught Global Ltd. 2,380,435 2,380,435 0
Westaway Chambers
39 Don Street
St. Helier
Jersey JE4 8UA
Channel Islands
Bristol Capitol LLC. 150,000 150,000 0
11777 San Vicente Bd., #702
Los Angeles, CA 90049
MacCaughern Trade Development 97,000 50,000 47,000
19401 Wunder Trail
TRABUCO CANYON, CA 92679
</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. 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 trading price of the common stock on or about the
actual date of conversion of the debentures.
(3) Assumes the sale of all shares offered.
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Registration Rights
In connection with the sale of the debentures and the warrants, we
entered into a registration rights agreement which requires us to register with
the SEC 1.5 times the number of 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 selling securityholders no longer own any
shares, whichever occurs first.
The registration rights agreement provides for certain payments 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.
PLAN OF DISTRIBUTION
The selling securityholders and their pledgees, donees, transferees and
other successors in interest may offer the shares of common stock received upon
conversion of the debentures or exercise of the warrants at various times in one
or more of the following 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;
- through the writing of options or short sales; or
- involving a combination of such methods or other methods.
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 such other prices as the
selling securityholders determine from time to time.
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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.
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.
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.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our bylaws, as amended, 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.
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EXPERTS
Our audited financial statements as of and for the year ended July 31, 1999
incorporated by reference in this prospectus and elsewhere in this registration
statement have been audited by Corbin & Wertz, 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.
Our audited financial statements as of and for the year ended July 31, 1998
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 report. 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.
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