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As filed with the Securities and Exchange Commission on June 7, 1996
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
DAW TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0464280
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
____________________
David R. Grow
2700 South 900 West Chief Financial Officer,
Salt Lake, Utah 84119 Secretary and Treasurer
(801) 977-3100 DAW TECHNOLOGIES, INC.
(Address, including zip code,and 2700 South 900 West
telephone number, including area code, Salt Lake City, Utah 84119
of registrant's principal executive offices) (801) 977-3100
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
_____________________
COPIES TO:
Richard G. Brown, Esq.
KIMBALL, PARR, WADDOUPS, BROWN & GEE
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
(801) 532-7840
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 426(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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
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TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED (1) PER SHARE (2) PRICE (2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 54,750 $5.94 $325,215 $113
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</TABLE>
(1) Pursuant to Rule 416, this Registration Statement covers any
additional shares of Common Stock which may become issuable by virtue
of the anti-dilution provisions of the Options.
(2) Estimated based upon the average of the high and low sale price of the
Common Stock on June 3, 1996, as reported on The NASDAQ Stock
Market/National Market System pursuant to the provisions of Rule
457(g) and Rule 457(c).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE>
DAW TECHNOLOGIES, INC.
54,750 SHARES OF COMMON STOCK
This Prospectus relates to 54,750 shares of Common Stock, $0.01 par
value (the "Common Stock"), of Daw Technologies, Inc. (the "Company" or
"Daw") which are issuable upon the exercise of certain outstanding options
(the "Options") and which may be offered for sale from time to time for the
account of H & M Capital Investments, Inc. (the "Selling Shareholder").
For information on the Selling Shareholder, see "Selling Shareholder."
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock by the Selling Shareholder. The proceeds from the
exercise of the Options, if any, will be received by the Company. See "Use
of Proceeds."
Distribution of the shares of Common Stock by the Selling Shareholder
may be effected from time to time in one or more transactions (which may
involve block transactions) on The NASDAQ Stock Market/National Market System
or any other exchange or automated quotation system on which the Common Stock
may then be listed, in privately negotiated transactions, in the
over-the-counter market, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or negotiated prices. The Selling Shareholder may effect such
transactions by selling shares of Common Stock to or through broker-dealers,
and such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Shareholder and/or
purchasers of shares of Common Stock for whom they act as agent (which
compensation may be in excess of customary commissions). The Selling
Shareholder and any agents, broker-dealers or underwriters that participate
in the distribution of the Common Stock may be deemed to be "underwriters"
as defined in the Securities Act of 1933, as amended (the "Securities
Act"), and any commission received by them and any profit on the resale of
the Common Stock purchased by them may be deemed to be underwriting discounts.
The Company's Common Stock trades on The NASDAQ Stock Market/National
Market System ("NASDAQ"). On June 3, 1996, the closing price of the Common
Stock on NASDAQ was $5.75 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
RISKS ASSOCIATED WITH AN INVESTMENT IN THE SHARES OF COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
All expenses of the registration of securities covered by this Prospectus are
to be borne by the Company, except that the Selling Shareholder will pay all
underwriting discounts and selling commissions, if any, and any legal fees
incurred by them.
The date of this Prospectus is ______________, 1996
<PAGE>
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDER
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY, AND IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), a Registration Statement on Form S-3 (the "Registration
Statement") with respect to the shares of Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and
the exhibits thereto. For further information pertaining to the Company and
the Common Stock, reference is hereby made to the Registration Statement,
including the exhibits thereto, which may be obtained from the Public
Reference Section of the Commission at the address set forth below.
Statements contained in this Prospectus regarding the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document incorporated or
deemed to be incorporated by reference in, or filed as an exhibit to, the
Registration Statement, each such statement being qualified in all respects
by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such materials may be obtained at prescribed rates from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act (File No. 0-21818) are incorporated herein by
reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1995.
(b) Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996.
(c) The description of the Company's Common Stock, $0.01 par value,
contained in the Company's Registration Statement on Form 8-A
filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including any amendment or report filed under
the Exchange Act for the purpose of updating such description.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the shares of
Common Stock shall be deemed to be incorporated by reference herein. Any
statement contained in a document incorporated by reference herein, unless
otherwise indicated herein, speaks as of the date of the document. Any
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<PAGE>
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates by reference the foregoing documents which
are not presented herein or delivered herewith. The Company will provide
without charge to each person to whom a Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the
information incorporated by reference in this Prospectus, other than exhibits
to such information (unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Requests
for such copies should be directed to Sharon Madden, Director of Shareholder
Relations, Daw Technologies, Inc., 2700 South 900 West, Salt Lake City, Utah
84119 (telephone (801) 977-3100).
THE COMPANY
The Company is a supplier of ultra-clean manufacturing environments, or
cleanrooms, to the semiconductor industry. The Company designs, engineers,
manufactures, installs and services all principal component systems for
advanced cleanrooms. The Company is a single-source provider of the entire
cleanroom, providing make-up and recirculating air handling systems, ceiling
systems, wall systems and floor systems. The Company also provides its
customers with services to integrate the design, installation and servicing
of cleanrooms, including architectural engineering and design, installation,
testing, certification, tool fit-up, and continuing on-site service and
support. The Company believes its integrated approach enables customers to
benefit from accelerated cleanroom design and installation, simplified
project control, single-source performance certification and cost
effectiveness.
Cleanrooms are critical to the semiconductor manufacturing process.
Process yields are highly dependent upon controlling contamination levels and
other environmental variables. These variables include particulates,
humidity, gasses, vibration, temperature and electro-magnetic fields. To be
competitive, semiconductor manufacturers must meet increasingly stringent
standards for cleanliness and environmental control in their fabrication
facilities ("fabs"). Moreover, because of shorter product life cycles and
competitive pressures, semiconductor manufacturers are demanding that new
cleanrooms be operational more quickly. The Company believes its advanced
systems and integrated solution allow it to effectively address the
requirements of efficient cleanroom design and installation.
The Company's principal customers are semiconductor manufacturers. The
Company has sold its component systems and cleanrooms to many of the world's
leading semiconductor manufacturers. A major component of the Company's
strategy is to develop long-term strategic relationships with such
manufacturers. In addition, the Company sells component systems and
cleanrooms to other manufacturers requiring ultra-clean environments. The
Company's principal executive offices are located at 2700 South 900 West,
Salt Lake City, Utah 84119 (telephone (801) 977-3100).
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RISK FACTORS
THE PURCHASE OF THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS,
AMONG OTHERS SET FORTH IN THIS PROSPECTUS, BEFORE MAKING A DECISION TO
PURCHASE THE COMMON SHARES OFFERED HEREBY.
DEPENDENCE ON SEMICONDUCTOR INDUSTRY; CYCLICALITY OF SEMICONDUCTOR INDUSTRY
The Company's products and services are sold primarily to companies in
the semiconductor industry. Major cleanroom expenditures generally occur in
conjunction with the initial construction or substantial renovation of a
semiconductor fabrication facility. Accordingly, the Company's business
depends in large part upon the capital expenditures of semiconductor
manufacturers, which in turn depend upon the current and anticipated demand
for integrated circuits and products utilizing integrated circuits. The
semiconductor industry is highly cyclical and has historically experienced
periodic downturns, which often have had a severe adverse effect on capital
expenditures by semiconductor manufacturers. Although in recent years the
semiconductor industry has experienced significant growth, during the fourth
quarter of 1995 and the first quarter of 1996, there have been certain events
that would indicate the industry could be currently in a cyclical downturn.
Any such a downturn could result in reduced capital spending by semiconductor
companies and the cancellation, reduction or delay of certain contracts
already awarded, and could have an adverse effect on the Company's revenues,
margins and operating results. The Company has experienced one contract
reduction in the first quarter of 1996, and there can be no assurance that
the Company's operations will not be further adversely affected by any such
cyclical downturn. In addition, a majority of the Company's revenues has
been historically generated from North American customers, and the Company's
operations could be adversely affected by a reduction in spending by North
American customers. Although the Company is focusing on increasing its
business in Asia, the location where the Company expects the most significant
growth in the semiconductor industry, there can be no assurance that the
Company will be successful in penetrating this market.
RELIANCE ON FEW CUSTOMERS
In the past, the Company has typically had one to five significant
customers in each year which accounted for more than ten percent of revenues;
these customers do not necessarily remain significant in subsequent years.
The number of companies requiring substantial new or renovated cleanrooms for
semiconductor manufacturing at any one time is relatively small, increasing
the Company's dependence on any significant customer or contract. Although
the composition of the Company's largest customers has changed from year to
year, revenues from the Company's top five customers in each of 1995, 1994,
and 1993 have accounted for approximately 52%, 72% and 77%, respectively, of
the Company's total sales. Revenues from the Company's top two customers in
each of 1995, 1994, and 1993 accounted for approximately 23%, 45%, and 62%,
respectively, of the Company's total sales. A reduction, delay, or
cancellation of orders from one or more of its significant customers, or the
loss of one or more of such customers, could have a material adverse effect
on the Company's operating results.
MANAGEMENT OF GROWTH
The Company is undergoing a period of rapid growth and has experienced a
period of rapid expansion of its operations. The Company's revenues
increased by approximately 57% from 1993 to 1994 and 48% from 1994 to 1995.
This growth has resulted in the need for additional capacity (including
facilities and skilled employees), new and increased responsibilities for
management personnel, and added pressures on the Company's operating and
financial systems. During the past two years, the Company's gross margins
and profit margins, as a percentage of revenues, have decreased as the
expansion of the Company's manufacturing capacity during this period created
manufacturing inefficiencies, project delays and overruns resulting in higher
than expected cost of contracts. There can be no assurance that the Company's
operations will not be similarly affected by future expansion of its
operations or that management can restore gross margins and profit margins to
their previous levels.
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If the Company continues to grow, the additional growth will place
additional burdens on management to manage the growth and increase or
maintain the Company's profitability. Additional growth may require the
Company to recruit and train additional management personnel in the areas of
corporate management, project management and accounting as well as additional
research and development and operational staff. Competition for such
personnel in the Company's industry is high, and there is no assurance that
management will be able to successfully recruit and hire qualified management
personnel. The Company's financial results depend in significant part on its
ability to manage the further expansion of its operations and to continue to
implement, improve and expand its systems, procedures and controls. Failure
to adequately manage the Company's rate of growth could adversely affect the
Company's ability to meet customer expectations and delivery requirements and
to provide a high level of service, which could have an adverse effect on the
Company's operations. In addition, there can be no assurance that the
Company will be able to sustain this growth or that the Company will be able
to generate any significant growth in revenues or profitability.
FINANCING FUTURE GROWTH AND OPERATIONS
The Company's future growth and operations are dependent upon a number
of factors including the availability of sufficient working capital or
suitable outside financing to support such growth and/or to finance its
operations. There can be no assurance, however, that the Company's working
capital will be sufficient to support such growth and/or finance its
operations, or that the Company will be able to obtain outside financing on
terms favorable to the Company, if at all. To the extent the Company is
unable to obtain necessary financing, the Company's operations, future growth
and product development could be adversely affected.
RAPID TECHNOLOGICAL CHANGE
The semiconductor industry is marked by rapid changes in technology.
Any changes in manufacturing techniques or underlying semiconductor
technology may require a corresponding change in the Company's cleanroom
systems. Changes in manufacturing techniques may also affect cleanroom
design and efficiency requirements. The changes required of the Company's
products may require quantitative changes in the number and size of particles
allowed in the cleanroom, in addition to qualitative changes to protect the
manufacturing process from radiation, impure gasses or other non-particulate
contamination. Potential increasing use of mini-environments or SMIF
("Standard Mechanical Interface") tools within the cleanroom will also
affect cleanroom design. There can be no assurance, however, that the
Company will be able to adapt to technological change in the industry. In
addition, there can be no assurance that the Company's competitors will not
develop enhancements to or future generations of competitive products that
will offer superior performance or features and render the Company's products
uncompetitive. Failure to adapt to changes in the industry or to develop and
introduce product enhancements or to gain customers' acceptance of such
products in a timely fashion would harm the Company's competitive position.
COMPETITION
The cleanroom industry is intensely competitive. The Company faces, and
expects to continue to face, intense competition from other manufacturers of
cleanroom components and other integrators of cleanroom systems. There can
be no assurance that developments by others will not render the Company's
products or technologies obsolete or uncompetitive. Many of the Company's
competitors and potential competitors have substantially greater capital
resources, manufacturing and marketing experience, research and development
staffs, sales forces and manufacturing facilities than the Company. The
Company strategy to position itself as an integrated supplier of cleanroom
systems is somewhat unique in the industry and results in competition both
with other component suppliers and with system integrators who do not
manufacture components. If the Company experiences success in marketing its
integrated approach, there can be no assurance that its competitors will not
duplicate such approach, through acquisitions, affiliations, internal
development or otherwise.
5
<PAGE>
INTERNATIONAL BUSINESS
Approximately 37%, 7% and 15% of the Company's revenues in 1995, 1994 and
1993, respectively, were attributable to sales outside North America. The
Company expects that international sales will represent an increasingly
significant portion of its total revenues in the future. Sales to customers
outside North America are subject to risks, including exposure to currency
fluctuations, the imposition of governmental controls, the need to comply
with a wide variety of foreign and U.S. export laws, political and economic
instability, trade restrictions, changes in tariffs and taxes, longer payment
cycles typically associated with foreign sales, the greater difficulty of
administering business overseas and general economic conditions. Although to
date the Company's results of operations have not been adversely affected by
foreign currency exchange rate fluctuations, there can be no assurance that
the Company's results of operations will not be adversely affected by foreign
currency fluctuations in the future. The Company has attempted to invoice
substantially all of its Asian sales in United States dollars, which may
adversely affect the Company's competitiveness in that market. The Company's
attempts to hedge against possible foreign currency fluctuations on contracts
denominated in local currencies may not be successful.
PATENTS AND OTHER INTELLECTUAL PROPERTY
The Company's success depends in part on its intellectual property.
While the Company attempts to protect its intellectual property through
patents, copyrights, trade secrets, and non-disclosure agreements, it
believes that its success will depend to a greater degree upon innovation,
technological expertise, and the ability to quickly adapt to and deliver new
technology. The Company currently holds several United States patents and
has one United States patent application pending. There can be no assurance
that the Company will be able to protect its technology or that competitors
will not be able to develop similar technology independently. No assurance
can be given that the claims allowed on any patents held or acquired by the
Company will be sufficiently broad to protect the Company's technology. In
addition, no assurance can be given that any existing or future patents
issued to the Company will not be challenged, invalidated, or circumvented or
that the rights granted thereunder will provide competitive advantages to the
Company. The Company's results of operations could be adversely affected by
the occurrence of any such event. Moreover, the Company may be forced to
incur significant costs to defend its patent rights. In addition, although
the Company believes that its products do not infringe any valid existing
proprietary rights of others, there can be no assurance that third parties
will not assert infringement claims in the future. There also may be pending
patent applications or issued patents of which the Company is not aware that
the Company may need to license or challenge at significant expense. There
can be no assurance that any such license would be available on acceptable
terms, if at all, or that the Company would prevail in any such challenge.
EFFECT OF FINANCIAL CONDITION ON COMPETITIVENESS
The Company attempts to market its cleanrooms, in part, on the premise
that the Company can provide an integrated cleanroom solution from design
through installation and certification. The Company believes that one of the
factors potential customers will consider in determining whether to delegate
responsibility for the cleanroom to the Company is the Company's financial
condition which affects the customer's perception of the Company's ability to
perform its contracts and stand behind its products. In the past, the
Company's financial condition may have hampered its ability to be named as
the integrated cleanroom supplier. The Company is required to post surety
bonds as a condition to bid for and obtain many of its contracts. The
Company's ability to obtain bonding is dependent upon, among other things,
its sureties' analysis of the Company's financial condition. The Company
believes that it has been limited in obtaining surety bonds in the past due
to the amount of its stockholders' equity and working capital. Although the
Company has substantially increased its stockholders' equity through equity
offerings and retention of earnings, the Company's ability to bid for and
obtain large contracts may be limited in the future.
CONTROL BY MANAGEMENT
The officers and directors of the Company, together with certain family
members, beneficially own a majority of the Company's Common Stock. Even if
all currently outstanding options are issued and exercised, such
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persons will, in all likelihood, continue to control the election of the
Company's Board of Directors and determine corporate actions requiring
shareholder approval.
RETENTION AND RECRUITMENT OF KEY PERSONNEL
The Company is highly dependent on the principal members of its
management and technical staff, the loss of whose services might impede the
ability of the Company to compete. In addition, the Company's ability to
recruit and retain highly qualified technical and management personnel is
critical to its success. Although the Company believes it will be successful
in recruiting and retaining skilled and experienced management and technical
personnel, there can be no assurance that the Company will be able to recruit
and retain such personnel on acceptable terms, given the competition between
numerous manufacturing and semiconductor-related companies. The Company has
not obtained key man life insurance on any of its management or technical
personnel other than Ronald W. Daw. In addition, it is anticipated that the
growth of the Company will require the employment of additional management
and engineering personnel. The failure to recruit such personnel could
materially adversely affect prospects for the Company's success.
GENERAL RISKS OF BUSINESS
The cleanroom manufacturing industry is subject to numerous risks
including but not limited to, interest rate increases, inflation, government
funding limitations, foreign currency fluctuations, tax laws, labor problems,
competition and general economic conditions. Although the Company believes
that it has developed a reputation for skill and quality in its products and
services, it is, and will continue to be, subject to such risks. In
addition, there can be no assurance that the Company will be able to operate
profitability in the future, that it will be awarded contracts it bids for or
that contracts it is awarded will prove to be profitable.
VARIABILITY OF QUARTERLY OPERATING RESULTS
The Company's revenues and operating results can fluctuate substantially
from quarter to quarter depending on such factors as the timing of
significant customer orders, the timing of revenue and cost recognition,
variations in the mix of products sold, changes in customer buying patterns,
fluctuations in the semiconductor equipment market, utilization of capacity,
manufacturing productivity and efficiency, availability of key components and
general trends in the economy. The procurement process of the Company's
customers is typically six to twelve months or longer from initial inquiry to
order and may involve competing capital budget considerations, thus making
the timing of customer orders uneven and difficult to predict. Any delay or
failure to receive anticipated orders could adversely affect the Company's
financial performance. A significant portion of the Company's net sales in
any quarter is typically derived from a small number of multi-million dollar
customer projects involving an upgrade of an existing facility or the
construction of a new facility. Customers may cancel or reschedule projects
with limited or no penalty. If a customer terminates a project, the Company
would typically be entitled to progress payments earned to the date of
termination, plus reimbursement of certain costs associated with the
contract. Given these factors, the Company expects that quarter to quarter
performance will fluctuate for the foreseeable future and consequently that
quarter to quarter comparisons may not be meaningful.
DEPENDENCE ON KEY SUPPLIERS
Certain of the components and sub-assemblies included in the Company's
products are obtained from a single supplier or a limited group of suppliers.
For example, the Company currently has one supplier which makes the castings
for the Company's floor systems, and any product coatings customized for a
specific project will generally be supplied by a single paint company.
Disruption or termination of these sources could have a temporary adverse
effect on the Company's operations. Although the Company may be able to
obtain and qualify alternative sources to supply these products, there is no
assurance it will be able to do so. A prolonged inability to obtain certain
components could have an adverse effect on the Company's operating results
and even a temporary delay could cause the Company to miss installation
deadlines, and possibly permanently damage customer relationships.
7
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FUTURE SALES OF COMMON STOCK BY EXISTING SHAREHOLDER; POTENTIAL ADVERSE EFFECT
ON MARKET PRICE
Future sales of a substantial number of shares of Common Stock or their
availability for sale in the public market could adversely affect the
prevailing market price of the Common Stock. The Company currently has
12,337,254 shares of Common Stock outstanding. The Company has entered into
a lock-up agreement (the "Lock-Up Agreements") with the owners of 6,134,377
shares of the Company's Common Stock (the "Lock-Up Shares"), pursuant to
which the owners of the Lock-Up Shares have agreed to limit the number of
shares which may be sold in each 90-day period commencing October 1, 1994 to
a maximum of 6.75% of the shares owned by such shareholder as of December 31,
1993 and eligible for resale under Rule 144. The Lock-Up Agreement expires
September 30, 1996. Thereafter, there will be no resale restrictions other
than those applicable to affiliates of the Company imposed by Rule 144 and
other applicable Federal and state securities laws. Future sales of these
shares by existing shareholders and sale of shares by other shareholders and
option holders could adversely affect the market price of the Common Stock.
VOLATILITY OF STOCK PRICE; NO DIVIDENDS
The market price of the Company's Common Stock is highly volatile.
Announcements concerning the Company or its competitors or regarding the
semiconductor industry may have a significant effect on the market price of
the Common Stock. The Company has not paid cash dividends on its Common
Stock and does not expect to do so in the foreseeable future.
POTENTIAL ADVERSE EFFECT OF AUTHORIZED BUT UNISSUED PREFERRED STOCK ON
HOLDERS OF COMMON STOCK; ANTI-TAKEOVER EFFECTS
The Board of Directors has authority to issue up to 10,000,000 shares of
Preferred Stock and to fix the rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further
vote or action by the shareholders. The rights of the holders of the Common
Stock will be subject to, and may be adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future. The
issuance of Preferred Stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company, thereby delaying,
deferring or preventing a change in control of the Company. Furthermore,
such Preferred Stock may have other rights, including economic rights senior
to the Common Stock, and, as a result, the issuance thereof could have a
material adverse effect on the market value of the Common Stock. The Company
has no present plans to issue shares of Preferred Stock.
OTHER FACTORS
This Prospectus incorporates by reference various documents filed with
the Commission that also contain specific factors and other information that
should be considered by prospective purchasers. See "Available
Information" and "Incorporation of Certain Information by Reference."
8
<PAGE>
SELLING SHAREHOLDER
The following table sets forth information with respect to the number of
shares of Common Stock beneficially owned by the Selling Shareholder. The
Selling Shareholder previously provided financial consulting services to the
Company in 1992 and 1993.
<TABLE>
<CAPTION>
OWNERSHIP SECURITIES OWNERSHIP PERCENTAGE
PRIOR TO BEING AFTER OWNERSHIP
SELLING SHAREHOLDER OFFERING OFFERED OFFERING OF CLASS
- ------------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
H & M Capital Investments, Inc. 61,393(1) 54,750 6,643 *
</TABLE>
__________________________
*Less than 1%.
(1) Includes 54,750 shares issuable upon exercise of the Options.
PLAN OF DISTRIBUTION
The distribution of the shares of Common Stock by the Selling
Shareholder may be effected from time to time in one or more transactions
(which may involve block transactions) on The NASDAQ Stock Market/National
Market System or any exchange or automated quotation system on which the
Common Stock may then be listed, in privately negotiated transactions, in the
over-the-counter market, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, or at negotiated prices. The Selling Shareholder may effect
such transactions by selling shares of Common Stock to or through
brokers-dealers, and such broker-dealers may receive compensation in the form
of underwriting discounts, concessions or commissions from the Selling
Shareholder and/or purchasers of shares of Common Stock for whom they may act
as agent (which compensation may be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the shares of Common Stock will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in
certain states, the shares of Common Stock may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is
complied with.
The Selling Shareholder and any broker-dealers, agents or underwriters
that participate with the Selling Shareholder in the distribution of the
shares may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any commissions received by them and any
profit on the resale of the shares of Common Stock purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
The Company has agreed to indemnify the Selling Shareholder against certain
liabilities, including liabilities under the Securities Act, as an
underwriter or otherwise.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares of
Common Stock by the Selling Shareholder. The proceeds, if any, received by
the Company upon the exercise of the Options will be utilized by the Company
for general working capital purposes.
LEGAL MATTERS
Certain legal matters relating to the shares of Common Stock offered
hereby will be passed upon for the Company by Kimball, Parr, Waddoups, Brown
& Gee, a professional corporation, Salt Lake City, Utah.
9
<PAGE>
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 have been audited by Grant
Thornton LLP, independent auditors, as stated in their reports which are
incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing. Future financial statements of the Company and the
reports thereon by Grant Thornton LLP also will be incorporated by reference
herein in reliance upon the authority of that firm as experts in giving those
reports; provided, however, only to the extent that said firm has audited
those financial statements and consented to the use of their reports thereon.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth expenses in connection with the issuance
and distribution of the Common Stock being registered, other than
underwriting discounts and commissions, if any, payable by the Selling
Shareholder. All of the amounts shown are estimates, except the SEC
registration fee.
DESCRIPTION AMOUNT
----------- ------
SEC registration fee . . . . . . . . . . . . . . . . . . . . $ 113.00
Accounting fees and expenses . . . . . . . . . . . . . . . . 3,000.00
Legal fees and expenses . . . . . . . . . . . . . . . . . . . 4,000.00
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . 1,000.00
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 8,113.00
-----------
-----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 16-10a-902 ("Section 902") of the Utah Revised Business
Corporation Act (the "Revised Act") provides that a corporation may
indemnify any individual who was, is, or is threatened to be made a named
defendant or respondent (a "Party") in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal (a "Proceeding"), because he
is or was a director of the corporation or is or was serving at its request
as a director, officer, partner, trustee, employee, fiduciary or agent of
another corporation or other person or of an employee benefit plan (an
"Indemnified Director"), against any obligation incurred with respect to a
Proceeding, including any judgment, settlement, penalty, fine or reasonable
expenses (including attorneys' fees), incurred in the Proceeding if his
conduct was in good faith, he reasonably believed that his conduct was in, or
not opposed to, the best interests of the corporation, and, in the case of
any criminal Proceeding, he had no reasonable cause to believe his conduct
was unlawful; except that (i) indemnification under Section 902 in connection
with a Proceeding by or in the right of the corporation is limited to payment
of reasonable expenses (including attorneys' fees) incurred in connection
with the Proceeding and (ii) the corporation may not indemnify an Indemnified
Director in connection with a Proceeding by or in the right of the
corporation in which the Indemnified Director was adjudged liable to the
corporation, or in connection with any other Proceeding charging that the
Indemnified Director derived an improper personal benefit, whether or not
involving action in his official capacity, in which Proceeding he was
adjudged liable on the basis that he derived an improper personal benefit.
Section 16-10a-906 of the Revised Act provides that a corporation may
not indemnify a director under Section 902 unless authorized and a
determination has been made (by the board of directors, a committee of the
board of directors or by the stockholders) that indemnification of the
director is permissible in the circumstances because the director has met the
applicable standard of conduct set forth in Section 902.
Section 16-10a-903 ("Section 903") of the Revised Act provides that,
unless limited by its articles of incorporation, a corporation shall
indemnify a director who was successful, on the merits or otherwise, in the
defense of any Proceeding, or in the defense of any claim, issue or matter in
the proceeding, to which he was a Party because he is or was a director of
the corporation, against reasonable expenses (including attorneys' fees)
incurred by him in connection with the Proceeding or claim.
In addition to the indemnification provided by Sections 902 and 903,
Section 16-10a-905 ("Section 905") of the Revised Act provides that, unless
otherwise limited by a corporation's articles of incorporation, a director
II-1
<PAGE>
may apply for indemnification to the court conducting the Proceeding or to
another court of competent jurisdiction. On receipt of an application and
after giving any notice the court considers necessary, (i) the court may
order mandatory indemnification under Section 903, in which case the court
shall also order the corporation to pay the director's reasonable expenses to
obtain court-ordered indemnification, or (ii) upon the court's determination
that the director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances and regardless of whether the director
met the applicable standard of conduct set forth in Section 902, the court
may order indemnification as the court determines to be proper, except that
indemnification with respect to certain Proceedings resulting in a director
being found liable for certain actions against the corporation may be limited
to reasonable expenses (including attorneys' fees) incurred by the director.
Section 16-10a-904 ("Section 904") of the Revised Act provides that a
corporation may pay for or reimburse the reasonable expenses (including
attorneys' fees) incurred by a director who is a Party to a Proceeding in
advance of the final disposition of the Proceeding if (i) the director
furnishes the corporation a written affirmation of his good faith belief that
he has met the applicable standard of conduct described in Section 902, (ii)
the director furnishes to the corporation a written undertaking, executed
personally or in his behalf, to repay the advance if it is ultimately
determined that he did not meet the required standard of conduct, and (iii) a
determination is made that the facts then known to those making the
determination would not preclude indemnification under Section 904.
Section 16-10a-907 of the Revised Act provides that, unless a
corporation's articles of incorporation provide otherwise, (i) an officer of
the corporation is entitled to mandatory indemnification under Section 903
and is entitled to apply for court ordered indemnification under Section 905,
in each case to the same extent as a director, (ii) the corporation may
indemnify and advance expenses to an officer, employee, fiduciary or agent of
the corporation to the same extent as a director, and (iii) a corporation may
also indemnify and advance expenses to an officer, employee, fiduciary or
agent who is not a director to a greater extent than the right of
indemnification granted to directors, if not inconsistent with public policy,
and if provided for by its articles of incorporation, bylaws, general or
specific action of its board of directors or contract.
The Registrant's Bylaws provide that the Registrant shall indemnify an
individual made a party to a proceeding because he is or was a director of
the Registrant, but only if the Registrant has authorized the payment in
accordance with Section 16-10a-906 of the Revised Act and a determination has
been made that the director (i) conducted himself in good faith; (ii)
reasonably believed that his conduct was in, or not opposed to, the
Registrant's best interests; and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful.
The Bylaws also provide the Registrant will not indemnify a director in
connection with a proceeding by or in the right of the Registrant in which
the director was adjudged liable to the Registrant, or in connection with any
other proceeding charging improper personal benefit to him, whether or not
involving action in his official capacity, in which he was adjudged liable on
the basis that personal benefit was improperly received by him.
The Registrant's Restated Articles of Incorporation provide that to the
fullest extent permitted by the Revised Act or any other applicable law as
now in effect or as it may hereafter be amended, a director of the Registrant
shall not be personally liable to the Registrant or its shareholders for
monetary damages for any action taken or any failure to take any action, as a
director. The extent to which the Revised Act permits director liability to
be eliminated is governed by Section 16-10a-841 of the Revised Act, which
provides that the liability of a director may not be eliminated or limited
for (i) the amount of financial benefit received by a director to which he is
not entitled; (ii) an intentional infliction of harm on the corporation or
its shareholders; (iii) a violation of Section 16-10a-842 of the Revised Act
which prohibits unlawful distributions by a corporation to its shareholders;
or (iv) an intentional violation of criminal law.
Indemnification may be granted pursuant to any other agreement, bylaw,
or vote of shareholders or directors. In addition to the foregoing, the
Registrant maintains insurance from commercial carriers against certain
liabilities which may be incurred by its directors and officers. The
foregoing description is necessarily general and does not describe all
details regarding the indemnification of officers, directors or controlling
persons of the Registrant.
II-2
<PAGE>
ITEM 16. EXHIBITS
REGULATION S-K
EXHIBIT NO. DESCRIPTION
- -------------- -----------
4.1 Restated Articles of Incorporation (incorporated by reference
to Exhibit No. 3.1 to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1993)
4.2 Bylaws of the Company (incorporated by reference to Exhibit
No. 3.2 to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1993).
5 Legal opinion of Kimball, Parr, Waddoups, Brown & Gee
23.1 Consent of Grant Thornton LLP
23.2 Consent of Kimball, Parr, Waddoups, Brown & Gee (included in
the opinion of counsel filed as Exhibit No. 5 hereto)
24 Power of Attorney (see page II-5)
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933 (the "Securities Act"), each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall
II-3
<PAGE>
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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 foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, 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 hereunder, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Salt Lake City, State of Utah, on
June 7, 1996.
DAW TECHNOLOGIES, INC.
By /s/ Ronald W. Daw
------------------------------------------
Ronald W. Daw
Chairman of the Board, President and Chief
Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Ronald
W. Daw and David R. Grow, and each of them, as his true and lawful
attorney-in-fact and agent, with full power of substitution, to sign on his
behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement
or the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his substitutes, shall
do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Ronald W. Daw Chairman of the Board, President, June 7, 1996
- ----------------------------- and Chief Executive Officer
Ronald W. Daw (Principal Executive Officer)
/s/ David R. Grow Executive Vice President, Chief
- ----------------------------- Financial Officer, Secretary June 7, 1996
David R. Grow and Treasurer (Principal Financial
Accounting Officer)
/s/ Robert G. Chamberlain Director June 6, 1996
- -----------------------------
Robert G. Chamberlain
/s/ Sterling D. Sessions Director June 7, 1996
- -----------------------------
Sterling D. Sessions
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
REGULATION S-K SEQUENTIAL SYSTEM
EXHIBIT NO. DESCRIPTION PAGE NO.
- -------------- ----------- -----------------
<S> <C> <C>
4.1 Restated Articles of Incorporation (incorporated
by reference to Exhibit No. 3.1 to the Company's
Annual Report on Form 10-KSB for the year ended
December 31, 1993)
4.2 Bylaws of the Company (incorporated by
reference to Exhibit No. 3.2 to the Company's
Annual Report on Form 10-KSB for the year
ended December 31, 1993)
5 Legal opinion of Kimball, Parr,
Waddoups, Brown & Gee
23.1 Consent of Grant Thornton LLP
23.2 Consent of Kimball, Parr, Waddoups, Brown
& Gee (included in the opinion of counsel filed
as Exhibit No. 5 hereto)
24 Power of Attorney (see page II-5)
</TABLE>
II-6
<PAGE>
June 6, 1996
The Board of Directors of
Daw Technologies, Inc.
2700 South 900 West
Salt Lake City, Utah 84119
Re: Daw Technologies, Inc.
Registration Statement on Form S-3
Gentlemen:
As counsel to Daw Technologies Inc., a Utah corporation (the
"Company"), in connection with the sale by a certain selling shareholder of the
Company (the "Selling Shareholder") of up to 57,450 shares (the "Shares") of
Common Stock, $0.01 par value, of the Company issuable upon the exercise of
certain options held by the Selling Shareholder, we have examined the originals
or certified, conformed or reproduction copies of all such records, agreements,
instruments and documents as we have deemed necessary as the basis for the
opinion expressed herein. In all such examinations, we have assumed the
genuineness of all signatures on original or certified copies and the conformity
to original or certified copies of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinion
hereinafter expressed, we have relied upon certificates of public officials and
statements or certificates of officers or representatives of the Company and
others.
Based upon and subject to the foregoing, we are of the opinion that
the Shares being offered by the Selling Shareholder, when issued and paid for in
accordance with the terms and conditions of the respective options, will be
legally issued, fully paid and nonassessable.
We hereby consent to the reference to our firm under "Legal Matters"
in the prospectus which constitutes a part of the Registration Statement and the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
KIMBALL, PARR, WADDOUPS, BROWN & GEE
<PAGE>
CONSENT
We have issued our reports dated February 16, 1996 accompanying the financial
statements of Daw Technologies, Inc., appearing in the 1995 Annual Report of
the Company to its shareholders and accompanying the schedule included in the
Annual Report on Form 10-K for the year ended December 31, 1995, which are
incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in the Registration Statement of the
aforementioned reports and to the use of our name as it appears under the
caption "Experts."
Grant Thornton, LLP
Salt Lake City, Utah
June 4, 1996
