As filed with the Securities and Exchange Commission on August 31, 1998
Registration No. 333-43149
=======================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________________________
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(Exact name of registrant as specified in charter)
DELAWARE 58-1954497
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1940 Northwest 67th Place
Gainesville, Florida 32653
(352) 373-4200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive office)
_______________________________________
DR. LOUIS F. CENTOFANTI
Chairman of the Board
Perma-Fix Environmental Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32653
(352) 373-4200
(Address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
IRWIN H. STEINHORN, ESQUIRE
Conner & Winters, A Professional Corporation
One Leadership Square, Suite 1700
211 North Robinson
Oklahoma City, Oklahoma 73102
(405) 272-5711
______________________________________
Approximate date of commencement of proposed sale to the
public: As soon as practicable after this Registration Statement
becomes effective.
If the only securities being registered on this form are being
offered pursuant to a dividend or interest reinvestment plans,
please check the following box: [ ]
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, 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, check the following box: [ ]
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this registration statement shall
<PAGE>
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall
become effective on such date as the Commission, acting pursuant to
said Section 8(a), may determine.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
____________________________________
Proposed Proposed
Number of Maximum Maximum
Title of Each Class Shares Offering Aggregate Amount of
of Securities to be to be Price Offering Registration
Registered Registered Per Share Price Fee(5)
___________________ ___________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
Common Stock, $.001 4,165,311(1) $ 1.5938(2) $ 6,638,673 $1,958.41
par value
Common Stock, $.001 5,061,763(3) $ 1.70 - $10,179,532 $3,002.96
par value $ 3.625(4)
____________________
<FN>
(1) Includes (a) 2,200,000 shares to be issued upon conversion of
the Company's Series 10 Class J Convertible Preferred Stock,
par value $.001 per share ("Series 10 Preferred") and in
payment of dividends accrued on the Series 10 Preferred; (b)
1,379,311 shares to be issued upon conversion of the Company's
Series 8 Class H Convertible Preferred Stock, par value $.001
per share ("Series 8 Preferred"); (c) 250,000 shares which
have been or may be issued by the Company in payment of
dividends accrued on the Series 4 Class D Convertible
Preferred Stock, par value $.001 per share ("Series 4
Preferred"), the Series 6 Class F Convertible Preferred Stock,
par value $.001 per share ("Series 6 Preferred"), which Series
6 Preferred was exchanged for all of the Series 4 Preferred
and the Series 8 Preferred, which Series 8 Preferred was
exchanged for all of the Series 6 Preferred; (d) 200,000
shares to be issued upon conversion of the Company's Series 9
Class I Convertible Preferred Stock, par value $.001 per
share; (e) 36,000 shares which may be issued by the Company in
payment of dividends accrued on the Series 5 Class E
Convertible Preferred Stock, par value $.001 per share
("Series 5 Preferred"), the Series 7 Class G Convertible
Preferred Stock, par value $.001 per share ("Series 7
Preferred"), which Series 7 Preferred was exchanged for all of
the Series 5 Preferred and the Series 9 Class I Convertible
Preferred Stock, par value $.001 per share ("Series 9
Preferred"), which Series 9 Preferred was exchanged for all of
the Series 7 Preferred; and (f) 100,000 shares to be issued
upon exercise of one warrant at an exercise price of $1.50 per
share.
(2) Estimated solely for the purposes of calculating the
registration fee in accordance with Rule 457(c) on the basis
of the average of the high and low price as quoted on the
NASDAQ Small Cap Market on August 27, 1998.
(3) Includes (a) 100,000 shares to be issued upon exercise of one
warrant at an exercise price of $1.70 per share; (b) 375,000
shares to be issued upon exercise of two warrants at an
exercise price of $1.8125; (c) 35,000 shares to be issued upon
exercise of two warrants at an exercise price of $1.8125; (d)
200,000 shares to be issued upon exercise of one warrant at an
exercise price of $1.875; (e) 1,875,000 shares to be issued
upon exercise of one warrant at an exercise price of $1.875;
(f) 625,000 shares to be issued upon exercise of one warrant
at an exercise price of $1.875; (g) 150,000 shares to be
issued upon exercise of one warrant at an exercise price of
$1.875; (h) 350,000 shares to be issued upon exercise of one
warrant at an exercise price of $1.875; (i) 200,000 shares to
be issued upon exercise of one warrant at an exercise price of
$2.00 per share; (j) 175,000 shares to be issued upon exercise
of one warrant at an exercise price of $2.00 per share; (k)
75,000 shares to be issued upon exercise of one warrant at an
exercise price of $2.00 per share; (l) 281,250 shares to be
issued upon the exercise of one warrant at an exercise price
of $2.125 per share; (m) 75,000 shares to be issued upon the
exercise of five warrants at an exercise price of $2.375 per
share; (n) 20,513 shares to be issued upon exercise of one
warrant at an exercise price of $2.4375 per share; (o) 150,000
shares to be issued upon exercise of one warrant at an
exercise price of $2.50 per share; (p) 75,000 shares to be
issued upon exercise of one warrant at an exercise price of
$2.50 per share; (q) 175,000 shares to be issued upon exercise
of one warrant at an exercise price of $3.00 per share; and
(r) 125,000 shares to be issued upon exercise of one warrant
at an exercise price of $3.625 per share.
(4) Estimated in accordance with Rule 457(g) for the purpose of
calculating the registration fee.
(5) A registration fee of $2,748.75 was previously paid with the
filing of the initial registration statement on December 23,
1997.
</FN>
</TABLE>
<PAGE>
<PAGE>
Subject to Completion: Dated August 31, 1998
PROSPECTUS
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PERMA-FIX ENVIRONMENTAL SERVICES, INC.
9,227,074 Shares of Common Stock, par value $.001
This prospectus ("Prospectus") covers 9,227,074 shares (the
"Shares") of the common stock, par value $.001 per share ("Common
Stock"), of Perma-Fix Environmental Services, Inc., a Delaware
corporation (the "Company") for reoffer or resale from time to time
by the Selling Shareholders (as listed on page 36). This includes
(i) 5,161,763 shares of Common Stock issuable upon the exercise of
certain Common Stock purchase warrants ("Warrants") held by certain
of the Selling Shareholders, (ii) 1,379,311 shares of Common Stock
issuable upon the conversion of the Company's Series 8 Class H
Convertible Preferred Stock, par value $.001 per share ("Series 8
Preferred"), held by certain of the Selling Shareholders, (iii)
200,000 shares of Common Stock issuable upon the conversion of the
Company's Series 9 Class I Convertible Preferred Stock, par value
$.001 per share ("Series 9 Preferred"), (iv) 2,200,000 shares of
Common Stock issuable upon conversion of the Company's Series 10
Class J Convertible Preferred Stock, par value $.001 per share
("Series 10 Preferred") held by certain of the Selling Shareholders
and issuable in payment of dividends accrued on the Series 10
Preferred (the Class 8 Preferred, Class 9 Preferred and Class 10
Preferred are collectively referred to as "Preferred Stock"), and
(v) 286,000 shares of Common Stock issuable in payment of accrued
dividends on the Preferred Stock currently held by certain of the
Selling Shareholders and previously issued in payment of accrued
dividends on the Company's Series 4 Preferred (which was exchanged
for the Series 6 Preferred), Series 5 Preferred (which was
exchanged for the Series 7 Preferred), Series 6 Preferred (which
was exchanged for the Series 8 Preferred), Series 7 Preferred
(which was exchanged for the Series 9 Preferred), Series 8
Preferred and Series 9 Preferred, as such terms are defined in
"Private Placements and Exchange Agreements." In order for each
Selling Shareholder to be legally permitted to sell Shares when
such Selling Shareholder deems it appropriate, the Company has
filed with the Securities and Exchange Commission ("Commission") a
registration statement (the "Registration Statement"), which
contains this Prospectus as a portion thereof, with respect to the
sale of the Shares from time to time. See "Plan of Distribution,"
"Summary of Securities Being Offered" and "Private Placements and
Exchange Agreements."
The Company will not receive any of the proceeds from the
conversion of the Preferred Stock or from the resale of Shares by
the Selling Shareholders. However, the Company will receive the
exercise price upon the exercise of the various warrants described
herein. See "Use of Proceeds."
The Company's Common Stock is traded under the symbol "PES" on
the Boston Stock Exchange ("BSE") and under the symbol "PESI" on
the National Association of Securities Dealers Automated Quotation
System SmallCap Market ("NASDAQ"). The Shares may be offered for
sale from time to time in one or more transactions, including block
trades, in the over the counter market, on the BSE and the NASDAQ,
in privately negotiated transactions, or in a combination of any
such methods of sale. On August 24, 1998, the closing bid price of
the Company's Common Stock as quoted by the NASDAQ was $1.9375 per
share.
The Company has agreed to pay all the costs and fees relating
to the registration of the Shares covered by this Prospectus.
However, the Company will not pay any discounts, concessions or
commissions payable to underwriters, dealers or agents incident to
the offering of the Shares or fees and expenses incurred by counsel
for the Selling Shareholders.
The mailing address, including zip code, and the telephone
number of the principal executive office of the Company is: 1940
Northwest 67th Place, Gainesville, Florida 32653, and the telephone
number is (352) 373-4200.
___________________________________
<PAGE>
INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT PROSPECTIVE INVESTORS
SHOULD CONSIDER PRIOR TO AN INVESTMENT IN THESE
SECURITIES.
___________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________________________________
The date of this Prospectus is ____________, 1998.
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<PAGE>
<PAGE>
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements contained within this Prospectus may be
deemed "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended (collectively, the
"Private Securities Litigation Reform Act of 1995"). All
statements in this Prospectus other than statements of historical
fact are forward-looking statements that are subject to known and
unknown risks, uncertainties and other factors which could cause
actual results and performance of the Company to differ materially
from such statements. The words "believe," "expect," "anticipate,"
"intend," "will," and similar expressions identify forward-looking
statements. Forward-looking statements contained herein relate to,
among other things, (i) ability or inability to improve operations
and become profitable on an annualized basis and continue its
operations, (ii) the Company's ability to develop or adopt new and
existing technologies in the conduct of its operations, (iii)
anticipated financial performance, (iv) ability to utilize net
operating loss carry forwards against future federal income tax
liabilities; (v) ability to comply with the Company's general
working capital requirements, (vi) ability to retain or receive
certain permits or patents, (vii) ability to be able to continue to
borrow under the Company's revolving line of credit, (viii) ability
to generate sufficient cash flow from operations to fund all costs
of operations and remediation of certain formerly leased property
in Dayton, Ohio, and the Company's facility in Memphis, Tennessee,
(ix) ability to remediate certain contaminated sites for projected
amounts, (x) ability of others to enter into markets serviced by
the Company, (xi) "Year 2000" computer issues, (xii) the Oak Ridge
Contracts (as defined), (xiii) anticipated revenues resulting from
the Oak Ridge Contracts and completion of the scope of work with
M&EC (as defined), and (xiv) all other statements which are not
statements of historical fact. While the Company believes the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance such expectations will prove
to have been correct. There are a variety of factors which could
cause future outcomes to differ materially from those described in
this Prospectus, including, but not limited to, (i) general
economic conditions, (ii) material reduction in revenues, (iii)
inability to collect in a timely manner a material amount of
receivables, (iv) increased competitive pressures, (v) the
inability to maintain and obtain required permits and approvals to
conduct operations, (vi) reduction in revenues and profitability of
services provided by the Company due to increased competition,
(vii) lack of resources to develop new technologies relating to the
waste management business, (viii) future federal tax audit or
audits which could reduce the Company's loss carry forwards, (ix)
limitations imposed by the Internal Revenue Code or the Company's
inability to utilize its loss carry forwards, (x) the inability to
develop new and existing technologies in the conduct of operations
or the inability of the New Process (as defined) to perform as
anticipated or to develop such for commercial use, (xi)
overcapacity in the environmental industry, (xii) inability or
failure to convert the computer systems of the Company's key
suppliers, customers, creditors, and financial service
organizations, in order to be "Year 2000" compliant, (xiii)
discovery of additional contamination or expanded contamination at
a certain Dayton, Ohio, property formerly leased by PFD (as
defined) or at PFM's (as defined) facility at Memphis, Tennessee,
which would result in a material increase in remediation
expenditures, (xiv) determination that PFM is the source of
chlorinated compounds at the Allen Well Field, (xv) changes in
federal, state and local laws and regulations, especially
environmental regulations, or in interpretation of such, (xvi)
potential increases in equipment, maintenance, operating or labor
costs, (xvii) management retention and development, (xviii) the
requirement to use internally generated funds for purposes not
presently anticipated, (xix) inability to become profitable, and if
unable to become profitable, the inability to secure additional
liquidity in the form of additional equity or debt, (xx) inability
to settle on reasonable terms certain claims made by the federal
government against a certain subsidiary of the Company that is a
potentially responsible party for clean up and costs incurred by
the government in remediating certain sites owned and operated by
others, (xxi) inability of the Company & M&EC to finalize the scope
of work documents relating to the Oak Ridge Contracts, (xxii)
inability of the Company and M&EC to design and construct the
required processing equipment in connection with the Oak Ridge
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<PAGE>
Contracts, (xxiii) the actual volume of waste to be received under
the Oak Ridge Contracts will not meet the expected totals as
presented by the DOE (as defined) (xxiv) a determination that the
amount of work to be performed by the Company under the Oak Ridge
Contracts is less than anticipated, (xxv) the inability of the
Company to perform the work assigned to it under the Oak Ridge
Contracts in a profitable manner, and (xxvi) the factors set forth
under "Risk Factors" contained in this Prospectus. The Company
undertakes no obligations to update publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise.
___________________________________
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act"),
and, in accordance therewith, files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D. C. 20549, as well as at its
Regional Offices located at 7 World Trade Center, Suite 1300, New
York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D. C. 20549, at prescribed rates.
Such materials can also be accessed through the World Wide Web site
of the Commission, which contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission (http://www.sec.gov). The
Company's Common Stock is listed on the BSE and with NASDAQ, and
reports, proxy statements and other information concerning the
Company may also be inspected at (a) the offices of the BSE at One
Boston Place, Boston, Massachusetts 02108, and (b) the offices of
NASDAQ at 1735 K Street, N.W., Washington, D. C. 20006-1506.
The Company has filed a registration statement on Form S-3
(together with any amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Shares offered by this
Prospectus. This Prospectus constitutes a part of the Registration
Statement and omits certain information contained in the
Registration Statement in accordance with the rules and regulations
of the Commission. Reference is made to the Registration Statement
and exhibits thereto for further information with respect to the
Company and the Shares of Common Stock offered hereby. Copies of
the Registration Statement and the exhibits thereto may be obtained
at prescribed rates upon request to the Commission in Washington,
D. C. Any statements contained herein concerning the provisions of
any documents are not necessarily complete, and, in each instance,
such statements are qualified in their entirety by reference to
such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission.
INCORPORATION BY REFERENCE
The following documents filed by the Company with the
Commission under the Exchange Act are incorporated by reference in
this Prospectus and will be deemed part of this Prospectus:
(1) Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) Current Report on Form 8-K, dated January 15, 1998;
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<PAGE>
(3) Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(4) Current report on Form 8-K, dated June 30, 1998;
(5) Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering under this
Prospectus will be deemed to be incorporated by reference into this
Prospectus from the respective dates those documents are filed. If
any statement in this Prospectus, in a subsequent supplement to
this Prospectus or any document incorporated by reference in this
Prospectus is modified or superseded by a statement in this
Prospectus, in subsequent supplement to this Prospectus, or in any
document incorporated by reference in this Prospectus, the earlier
statement will be deemed, for the purposes of this Prospectus to
have been modified or superseded by the subsequent statement and
the earlier statement is incorporated by reference only as modified
or to the extent it is not superseded
The Company will provide to each person to whom this
Prospectus is delivered a copy of any or all of the documents which
have been or may be incorporated by reference in this Prospectus
(other than certain exhibits to those documents). Such copies will
be provided upon written or oral request and without charge.
Requests should be directed to Richard T. Kelecy, Perma-Fix
Environmental Services, Inc., 1940 Northwest 67th Place,
Gainesville, Florida 32653, telephone (352) 373-4200.
RISK FACTORS
In evaluating an investment in the Shares, prospective
purchasers of the Shares pursuant to this Prospectus should
consider carefully the factors set forth below, as well as the
other information contained in this Prospectus and incorporated
herein by reference.
Accumulated Deficits; Net Losses; Future Losses
The Company has reported consolidated net losses in all annual
periods since it began operations in 1991. The Company's historical
consolidated balance sheet at December 31, 1997, reflected an
accumulated deficit of approximately $20,551,000. The Company's
consolidated statement of operations for the year ended
December 31, 1997, reflected a net loss applicable to Common Stock
of approximately $4,261,000, or a net loss of approximately $.40
per share, including the loss from discontinued operations of
$4,101,000 or $.39 per share, as compared to a net loss applicable
to Common Stock of approximately $2,405,000, or a net loss of
approximately $.27 per share, including the loss from discontinued
operations of $287,000 or $.03 per share for the year ended
December 31, 1996. For the three months ended June 30, 1998, the
Company had an unaudited consolidated net income of approximately
$127,000 on unaudited consolidated net revenues of approximately
$7,678,000, as compared to an unaudited consolidated net loss of
approximately $525,000, including the loss from discontinued
operations of $517,000, on unaudited consolidated net revenues of
approximately $6,697,000 for the three months ended June 30, 1997.
However, for the six month period ended June 30, 1998, the Company
had an unaudited consolidated net loss of approximately $364,000 on
unaudited consolidated net revenues of approximately $14,226,000,
as compared to an unaudited consolidated net loss of approximately
$1,522,000, including the loss from discontinued operations of
$953,000, on unaudited consolidated net revenues of approximately
$12,447,000 for the six months ended June 30, 1997. If the Company
is unable to become profitable on an annualized basis in the
foreseeable future, such inability would have a material adverse
effect on the Company and the Company's ability to operate.
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<PAGE>
In March 1997, the Commission announced its position in
accounting for preferred stock which is convertible into common
stock at a discount from the market price on the date of issuance
of such preferred stock. The Commission's position is that a
preferred stock dividend should be recorded for the difference
between the conversion price and quoted market price of the common
stock into which the preferred stock is convertible as determined
on the date of issuance of such preferred stock. To comply with
this position, the Company restated its 1996 financial statements
in its Annual Report on Form 10-K for the year ended December 31,
1997, to reflect a dividend of approximately $2,000,000 related to
sales by the Company of convertible preferred stock in 1996. As a
result of the restatement, the Company's net loss applicable to
Common Stock for 1996 increased to $2,405,000 from the previously
reported net loss applicable to Common Stock for 1996 of $405,000.
During January, 1997, an explosion and fire occurred at the
Memphis, Tennessee facility of the Company's wholly owned
subsidiary, Perma-Fix of Memphis, Inc. ("PFM"). As a result of
this significant disruption, PFM discontinued its fuel blending
operations, which represented the principal line of business of PFM
prior to the occurrence of the fire and explosion, and to limit
PFM's activities only to providing off-site storage and operating
as a transfer facility for hazardous and non-hazardous waste. As
a result of ceasing its principal line of business at PFM's
Memphis, Tennessee facility, the Company recorded a loss on
disposal of discontinued operations of $3,053,000 for 1997. See
"The Company-Facility Disruption."
Potential Environmental Liability
The Company's business involves rendering services in
connection with management of waste, including certain types of
hazardous waste and low level radioactive waste. The nature of
this business is such that the Company cannot avoid exposure to
significant risk of liability for damages. Such liability could
involve, without limitation, (a) claims for clean-up costs,
personal injury or damage to the environment in cases in which the
Company is held responsible for the release of hazardous or
radioactive materials; (b) claims of employees, customers or third
parties for personal injury or property damage occurring in the
course of the Company's operations; and (c) claims alleging
negligence or professional errors or omissions in the planning or
performance of its services or in the providing of its products.
In addition, the Company could be deemed a responsible party for
the cost of clean-up of any property which may be contaminated by
hazardous substances generated by the Company and disposed of at
such property or transported by the Company to a site selected by
the Company, including properties owned or leased by the Company.
The Company could also be subject to fines and civil penalties in
connection with violations of regulatory requirements. See "--
Governmental Regulation" and "The Company Potential Environmental
Liability and Certain Environmental Expenditures."
Loss Carryovers
Certain of the Company's losses have resulted in net operating
loss carryovers which the Company anticipates may be used to reduce
the federal income tax payments which the Company would otherwise
be required to make with respect to income generated in future
years, if any. The Company had available net operating loss
carryovers of approximately $9,800,000 at December 31, 1997, based
on its federal income tax returns as filed with the Internal
Revenue Service ("IRS") for taxable years through 1996 and losses
sustained in 1997. The use of the net operating loss carryovers
is, however, subject to certain limitations and will expire to the
extent not utilized by the years 2006 through 2011. See "The
Company--Availability of Company's Loss Carryovers." In addition,
the amount of these carryovers has not been audited or approved by
the IRS, and, accordingly, no assurance can be given that such
carryovers will not be reduced as a result of audits in the future.
Governmental Regulation
The Company's business is subject to extensive, evolving and
increasingly stringent federal, state and local environmental laws
and regulations. Such federal, state and local environmental laws
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<PAGE>
and regulations govern the Company's activities regarding the
treatment, storage, recycling, disposal and transportation of
hazardous and non-hazardous waste and low level radioactive waste.
The Company must obtain and maintain permits, licenses and/or
approvals in order to conduct such activities in compliance with
such laws and regulations. Failure to obtain and maintain such
permits, licenses and/or approvals would have a material adverse
effect on the Company, its operations and financial condition.
There can be no assurance that the Company will be able to maintain
its currently held permits, licenses and/or approvals or obtain any
additional permits, licenses and/or approvals which may be required
as the Company expands its operations. See "The Company--
Governmental Regulation," and "--Permits and Licenses."
Because the environmental industry continues to develop
rapidly, the Company cannot predict the extent to which its
operations may be affected by future enforcement policies as
applied to existing laws, by changes to current environmental laws
and regulations or by the enactment of new environmental laws and
regulations. Any predictions regarding possible liability under
such laws are complicated further by current environmental laws
which provide that the Company could be liable jointly and
severally for certain activities of third parties over whom the
Company has limited or no control. See " Potential Environmental
Liability." The nature of the standards imposed by federal, state,
and local permitting laws require the Company to incur certain
levels of capital expenditures to maintain compliance with such
standards. See "The Company Potential Environmental Liability and
Certain Environmental Expenditures" and "--Governmental
Regulation."
The inability of the Company to become profitable on a long
term basis could have a negative impact on the Company's ability to
remain in compliance with various federal, state and local
environmental regulations. Violation of such federal, state and
local regulations could result in the loss of one or more of the
Company's permits or subject the Company to substantial fines,
penalties or other liabilities that could have a material adverse
impact on the Company's business.
Potential Increase in Litigation
The Company's operations are regulated by numerous laws
regarding procedures for waste treatment, storage, recycling,
transportation and disposal activities. See "The Company--
Governmental Regulation." In recent years, the waste treatment
industry has experienced a significant increase in so-called
"toxic-tort" litigation as those injured by contamination seek to
recover for personal injuries or property damage. The Company
believes that as the Company's operations and activities expand,
there will be a similar increase in the potential for litigation
alleging that the Company is responsible for contamination or
pollution caused by its normal operations, negligence or other
misconduct or for accidents which occur in the course of the
Company's business activities. Such litigation, if significant and
not adequately insured against, could have a material adverse
effect upon the Company's operations and financial condition. In
addition, involvement in protracted litigation would likely result
in expenditure of significant amounts of the Company's time, effort
and money, and could prevent the management of the Company from
focusing on the operation and expansion of the Company and thereby
result in a material adverse effect upon the Company. See "--The
Company-Potential Environmental Liability and Certain Environmental
Expenditures."
Insurance
The business of the Company exposes it to various risks,
including claims for causing damage to property and injuries to
persons which may involve allegations of negligence or professional
errors or omissions in the performance of its services. Such
claims could be substantial. See " Potential Environmental
Liability" and "--Potential Increase in Litigation" and "The
Company - Potential Environmental Liability and Certain Capital
Expenditures." The Company believes that its insurance coverage is
presently adequate and similar to or greater than the coverage
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maintained by other companies of its size in the industry. There
can be no assurance that the Company will be able to obtain
adequate or required insurance coverage in the future or, if
obtainable, that such insurance be available at affordable rates.
If the Company cannot obtain or maintain such coverage, it would be
a violation of its permit conditions and other requirements of the
environmental laws, rules and regulations under which the Company
operates and the Company would be unable to continue certain of its
operations. Such events would have a material adverse effect on
the Company's operations and financial condition. See "The
Company--Insurance."
Reliance on Key Employees; Attraction and Retention of Qualified
Professionals
The Company is substantially dependent upon the services of
Dr. Louis F. Centofanti, its Chairman, President and Chief
Executive Officer. The loss of Dr. Centofanti could have a
material adverse effect on the Company. Effective October 1, 1997,
Dr. Centofanti entered into a three (3) year employment agreement
("Centofanti Employment Agreement") with the Company. See "The
Company--Centofanti Employment Agreement." The Company's future
success depends on its ability to retain and expand its staff of
qualified personnel, including environmental specialists and
technicians, sales personnel and engineers. There can be no
assurance that the Company will be successful in its efforts to
attract and retain such personnel as their availability is limited
due to the rapid increase in the demand for hazardous waste
management services and the highly competitive nature of the
hazardous waste management industry. The Company does not maintain
key-person insurance on any of its employees, officers or
directors.
Dependence on Environmental Regulation and Future Legislation
Demand for the Company's services is substantially dependent
upon the public's concern with, and the continuation and
proliferation of the laws and regulations governing, the treatment,
storage, recycling and disposal of hazardous, non-hazardous and low
level radioactive waste. A decrease in the level of public
concern, the repeal or modification of such laws, or any
significant relaxation of regulations relating to the treatment,
storage, recycling and disposal of hazardous waste and low level
radioactive waste, would significantly reduce the demand for the
services offered by the Company and could have a material adverse
effect on the Company, its operations and financial condition.
Competition
The Company competes with numerous companies which are able to
provide one or more of the environmental services offered by the
Company. Many of the Company's competitors have greater financial,
human and other resources than the Company. The increased
competition in the waste management industry has resulted in
reduced gross margin levels, which are likely to become further
reduced due to several factors: (a) more companies entering the
market as the industry continues to mature; (b) the likely
expansion of the range of services offered by current and future
competitors of the Company; (c) the current efforts of companies
and governmental authorities to encourage waste minimization; and
(d) the existence of fewer unserved markets available for Company
expansion as the Company and its competitors move into new
geographic markets. The increased competition and reduced gross
margin levels could have a material adverse effect on the business
and financial condition of the Company. See "The Company--
Competitive Conditions."
Voting Control; Ability to Direct Management
Prior to the conversion of the outstanding shares of the
Company's Series 3 Class C Convertible Preferred Stock, par value
$.001 per share (the "Series 3 Preferred"), Series 8 Preferred,
Series 9 Preferred and Series 10 Preferred or the exercise of any
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outstanding warrants and options, approximately 9.8% of the
outstanding shares of Common Stock is held by the Company's
executive officers and directors as of the date of this Prospectus.
In addition, such persons have options or similar other rights to
acquire approximately 4.8% of additional shares of the Company's
Common Stock. Assuming the options and warrants held by the
Company's executive officers and directors which are exercisable
within 60 days of the date hereof have been exercised and the
Company's outstanding shares of preferred stock are not converted
and no other outstanding options or warrants are exercised, the
Company's executive officers and directors would beneficially own,
as a group, approximately 14.2% of the outstanding shares of Common
Stock.
As of the date of this Prospectus, RBB Bank Aktiengesellschaft
("RBB Bank"), located in Graz, Austria, owns of record 970,885
shares of Common Stock, or approximately 7.9% of the outstanding
shares of Common Stock as of the date of this Prospectus. RBB Bank
is also the owner of record of (i) 4,000 shares of the Company's
Series 3 Preferred, which are convertible into approximately
2,672,024 shares of Common Stock, assuming the average closing bid
quotation for the Common Stock for the five trading days
immediately preceding each conversion date equals or exceeds $2.00
per share, (ii) 2,500 shares of Series 8 Preferred, which are
convertible into approximately 1,379,311 shares of Common Stock,
assuming the Conversion Price Adjustment (as defined under "Summary
of Securities Being Offered") is not in effect, or if in effect,
assuming the average closing bid quotation for the Common Stock for
the five trading days immediately preceding each conversion date
equals or exceeds $2.27 per share, and (iii) 3,000 shares of Series
10 Preferred, which are convertible into approximately 1,600,000
shares of Common Stock assuming the average closing bid quotation
for the Common Stock five trading days immediately preceding each
conversion date equals or exceeds $2.34 per share. The foregoing
estimates are based on the assumptions discussed in this paragraph
and do not include the shares of Common Stock which may be issued
to RBB Bank in payment of dividends accrued on the Series 3
Preferred, Series 8 Preferred and the Series 10 Preferred.
Depending on the price of the Common Stock as of the date of
conversion and under certain conditions, the number of shares of
Common Stock issuable upon conversion of the Series 3 Preferred,
Series 8 Preferred, Series 9 Preferred and Series 10 Preferred may
exceed the amounts indicated above. See "Summary of Securities
Being Offered."
In addition to the shares of the Company's Common Stock and
preferred stock held by RBB Bank, RBB Bank holds warrants which
were issued in connection with the issuance of the Series 3
Preferred ("1996 RBB Warrants"), which may be exercised for the
purchase of up to 2,000,000 shares of Common Stock; the Series 6
Warrants (as defined under "Private Placements and Exchange
Agreements"), which may be exercised for the purchase of up to
656,250 shares of Common Stock; and the Series 10 Warrants (as
defined under "Private Placements and Exchange Agreements"), which
may be exercised for the purchase of up to 350,000 shares of Common
Stock.
If RBB Bank acquires (i) an aggregate of an additional
5,651,335 shares of Common Stock on conversion of the Series 3
Preferred, Series 8 Preferred and Series 10 Preferred, and (ii)
3,006,250 shares of Common Stock upon the exercise of the 1996 RBB
Warrants, Series 6 Warrants and Series 10 Warrants, RBB Bank will
own approximately 9,628,470 shares of Common Stock (which includes
the 970,885 shares of Common Stock directly held by RBB Bank as of
the date of this Prospectus but does not include the shares of
Common Stock which may be issuable for payment of dividends on the
Series 3 Preferred, Series 8 Preferred, and Series 10 Preferred),
representing approximately 46.1% of the Company's then outstanding
Common Stock, assuming no other options or warrants are exercised,
the Series 9 Preferred is not converted, and the Company does not
issue any additional shares of Common Stock after the date of this
Prospectus. In such event, RBB Bank would be the largest
shareholder of the Company, and the Company may not have sufficient
remedies to be able to avoid an actual change in control of the
Company if RBB Bank seeks such a change in control. See "Private
Placements and Exchange Agreements" and "Selling Shareholders."
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<PAGE>
Potential Adverse Effect to Company and Possible Adverse Impact on
Earnings Per Share Upon Exercise of Outstanding Warrants and
Options and Conversion of Outstanding Preferred Stock
The Company has outstanding warrants to purchase up to
approximately 13,256,000 shares of Common Stock, including, without
limitation, the 1996 RBB Warrants, Series 6 Warrants, Series 10
Warrants, the Liviakis Warrant (as defined in "Private Placements
and Exchange Agreements RBB Series 10 Private Placement"), the Prag
Warrant (as defined in "Private Placements and Exchange
Agreements RBB Series 10 Private Placement"), and the other
warrants for purchase of shares of Common Stock covered in this
Prospectus (as described under "Summary of Securities Being
Offered" ) and outstanding options to purchase up to approximately
1,067,438 shares of Common Stock. The exercise prices of the
outstanding warrants for purchase of shares of the Company's Common
Stock range from $ .73 per share to $3.625 per share, subject to
adjustment pursuant to certain anti-dilution provisions. See
"Summary of Securities Being Offered" and "Use of Proceeds." The
Company is also obligated to issue to (a) RBB Bank (i) up to
approximately 2,672,024 shares of Common Stock upon conversion of
the Series 3 Preferred assuming that the average closing bid
quotation for the Common Stock for five trading days immediately
preceding each of the conversion date or dates of the Series 3
Preferred equals or exceeds $2.00, (ii) up to approximately
1,379,311 shares upon the conversion of the Series 8 Preferred,
assuming the Conversion Price Adjustment is not in effect, or, if
in effect assuming the average closing bid quotation for the Common
Stock for the five trading days immediately preceding each
conversion date or dates of the Series 8 Preferred equals or
exceeds $2.27, and (iii) up to approximately 1,600,000 shares of
Common Stock upon conversion of the Series 10 Preferred assuming
the average closing bid quotation for the Common Stock five trading
days immediately preceding each conversion date equals or exceeds
$2.34 per share. The Company is also obligated to issue to The
Infinity Fund, L.P. ("Infinity") up to approximately 200,000 shares
of Common Stock upon conversion of the Series 9 Preferred assuming
the Conversion Price Adjustment is not in effect, or, if in effect,
assuming the average closing bid quotation for Common Stock for the
five trading days immediately preceding each conversion date or
dates of the Series 9 Preferred equals or exceeds $2.27 per share.
See "Summary of Securities Being Offered" and "Private Placements
and Exchange Agreements." Depending on the price of the Common
Stock as of the date of conversion and under certain conditions,
the number of shares issuable upon conversion of the Series 3
Preferred, Series 8 Preferred, Series 9 Preferred and Series 10
Preferred may exceed the amounts indicated above. In addition, the
terms of Series 3 Preferred, Series 8 Preferred, Series 9 Preferred
and Series 10 Preferred allow the Company to pay accrued dividends
on such preferred stock either in cash or Common Stock, and the
Company intends to pay dividends accruing on the outstanding shares
of Series 3 Preferred, Series 8 Preferred, Series 9 Preferred and
Series 10 Preferred in shares of Common Stock rather than cash if
and when declared by the Board of Directors. As of August 24,
1998, the closing bid per share of the Company's Common Stock as
quoted on the NASDAQ was $1.9375. See "Private Placements and
Exchange Agreements."
The issuance of Common Stock pursuant to such warrants,
options, convertible preferred stock, or in payment of dividends on
the Series 3 Preferred, Series 8 Preferred, Series 9 Preferred and
Series 10 Preferred could adversely affect the ability of the
Company to, and the terms on which it can, raise additional equity
capital. If all or a substantial portion of such warrants and
options are exercised and all or a substantial portion of the
Series 3 Preferred, Series 8 Preferred, Series 9 Preferred and
Series 10 Preferred are converted into Common Stock, the issuance
of the additional shares of Common Stock will have a substantial
and material adverse impact on an existing stockholder's ownership
percentage of the outstanding shares of Common Stock and may result
in a "change of control" of the Company. Moreover, in the event
the Company generates net income, there could be a substantial
material adverse impact on earnings per share if such additional
shares are issued and to the extent the options and warrants are
required to be included in the weighted average shares outstanding
calculation. See "--Voting Control; Ability to Direct Management,"
"--Barriers to Takeover" and "Private Placements and Exchange
Agreements."
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No Dividends Paid
Since its inception, the Company has not paid cash dividends
on its Common Stock. The Company intends to retain future
earnings, if any, to provide funds for the operation and/or
expansion of its business. Accordingly, the Company does not
anticipate paying cash dividends on its Common Stock in the
reasonably foreseeable future. Moreover, the terms of the
Company's loan agreement with its principal lender provides that no
dividends may be paid on the Common Stock without the lender's
approval.
The terms of the Series 3 Preferred, Series 8 Preferred,
Series 9 Preferred and Series 10 Preferred allow the Company to pay
dividends on the shares of such preferred stock in cash or Common
Stock. The Company currently intends to pay the dividends accruing
on the shares of Series 3 Preferred, Series 8 Preferred, Series 9
Preferred and Series 10 Preferred in shares of Common Stock if and
when declared and paid by the Board of Directors of the Company.
See "--Potential Adverse Effect to the Company and Possible Adverse
Impact on Earnings Per Share Upon Exercise of Outstanding Warrants
and Options and Conversion of Outstanding Preferred Stock" and
"Private Placements and Exchange Agreements."
Barriers to Takeover
The Company is a Delaware corporation and is governed, in
part, by the provisions of Section 203 of the General Corporation
Law of Delaware, an anti-takeover law enacted in 1988. In general,
Section 203 prohibits a Delaware public corporation from engaging
in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which
the person became an interested stockholder, unless the business
contribution is approved in a prescribed manner. As a result of
Section 203, potential acquirers of the Company may be discouraged
from attempting to effect acquisition transactions with the
Company, thereby possibly depriving holders of the Company's
securities of certain opportunities to sell or otherwise dispose of
such securities at above-market prices pursuant to such
transactions. Further, the Company's 1991 Performance Equity Plan,
1992 Outside Directors Stock Option Plan and 1993 Nonqualified
Stock Option Plan provide for the immediate acceleration of, and
removal of restrictions from, options and other awards under such
plans upon a "change of control" (as defined in the respective
plans). Such provisions may also have the result of discouraging
acquisitions of the Company. See "--Voting Control; Ability to
Direct Management."
If RBB Bank acquires an aggregate of 9,628,470 additional
shares of Common Stock upon such conversion and exercise of the
outstanding convertible preferred stock and warrants of the Company
held by RBB Bank, RBB Bank will own approximately 46.1% of the
outstanding shares of Common Stock of the Company, which includes
the 970,885 shares of Common Stock directly held by RBB Bank as of
the date of this Prospectus but does not include the shares of
Common Stock which may be issuable in payment of dividends on the
Series 3 Preferred, Series 8 Preferred and Series 10 Preferred.
This estimate assumes that the Series 9 Preferred is not converted
, the Infinity Warrants are not exercised, and that no shares of
Common Stock are issued by the Company after the date of this
Prospectus, other than in connection with the conversion of the
outstanding shares of Series 3 Preferred, Series 8 Preferred and
Series 10 Preferred and exercise of the 1996 RBB Warrants, Series
6 Warrants and Series 10 Warrants. In such event, RBB Bank will be
the largest single stockholder of the Company and will have such a
significant number of shares of Common Stock within its control
that the Company may have insufficient remedies to avoid an actual
change in control of the Company in favor of RBB Bank. The issued
and outstanding shares of the Company's preferred stock held by RBB
Bank and the 1996 RBB Warrants, Series 6 Warrants and Series 10
Warrants held by RBB Bank could discourage other persons from
attempting to acquire the Company even if RBB Bank does not obtain
control of the Company. See "--Voting Control; Ability to Direct
Management" and "Private Placements and Exchange Agreements."
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THE COMPANY
Company Overview
The Company is a Delaware corporation organized in 1990. The
Company is engaged, through its subsidiaries, in the (a) waste
management services, consisting of treatment, storage, recycling,
and disposal of hazardous and non-hazardous industrial and
commercial wastes, and the storage, treatment and disposal of
certain low-level radioactive waste; and (b) consulting and
engineering services to industry and government for broad-scope
environmental problems. In recent years, the Company has grown
through acquisitions and internal development. The Company's
primary subsidiaries in the waste management services are:
* Perma-Fix Treatment Services, Inc. ("PFTS") located in
Tulsa, Oklahoma;
* Perma-Fix of Florida, Inc. ("PFF") located in Gainesville,
Florida;
* Perma-Fix of Dayton, Inc. ("PFD") located in Dayton, Ohio;
* Perma-Fix, Inc. ("PFI") located in Gainesville, Florida;
* Perma-Fix of Ft. Lauderdale, Inc. ("PFFL") located in Davie,
Florida;
* Perma-Fix of Memphis, Inc. ("PFM") located in Memphis,
Tennessee.
The Company's primary subsidiaries in the consulting and
engineering services are:
* Mintech, Inc., located in Tulsa, Oklahoma, and
* Schreiber Yonley & Associates located in St. Louis,
Missouri.
The Company's executive offices are located at 1940 N.W. 67th
Place, Gainesville, Florida 32653.
Principal Products and Services
The Company, through its subsidiaries, is engaged in two lines
of business: (a) waste management, including off-site and on-site
services for the treatment, storage, recycling, and disposal of
hazardous, non-hazardous and mixed low-level radioactive and
hazardous wastes; and (b) environmental engineering and consulting
services specializing in environmental management programs, agency
communications, regulatory permitting, compliance and auditing,
landfill design, field testing and characterization. The Company
presently services institutions, commercial companies, and
governmental agencies nationwide. Distribution channels for
services are through direct sales to customers by the Company's
sales force or via intermediaries.
New Process
The Company has developed a new process ("New Process")
designed to remove certain types of organic hazardous constituents
from soils or other substrates ("Soils"). This New Process will be
used at PFF's facility and is designed to remove the organic
hazardous constituents from the Soils through a water based system.
The Company has filed a patent application with the U. S. Patent
and Trademark Office covering the New Process. As of the date of
this Prospectus, the Company has not received a patent for the New
Process, and there are no assurances that such a patent will be
issued to the Company.
Until development by the Company of this New Process, the
Company was not aware of a relatively simple and inexpensive
process that would remove the organic hazardous constituents from
Soils without elaborate and expensive equipment or expensive
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<PAGE>
treating agents. Due to the organic hazardous constituents
involved, the disposal options for such materials are extremely
limited, resulting in high disposal cost when there is a disposal
option available. By removing the organic hazardous waste
constituents from the Soils to a level where the Soils may be
returned to the ground, the generator's disposal options for such
waste are substantially increased, allowing the generator to
dispose of such waste at substantially less cost.
As of the date of this Prospectus, the Company has only
performed limited testing on the New Process and is developing the
New Process for commercial use. As a result, there are no
assurances that the New Process will perform as presently expected,
once such is fully developed for commercial use. It is anticipated
that the Company will have developed the New Process and such will
be ready for commercial use on or before the end of 1998. Further,
changes to current environmental laws and regulations could limit
the use of the New Process or the disposal options available to the
generator. See "-- Permits and Licenses."
Facility Disruption
On January 27, 1997, a fire and explosion occurred at PFM's
facility in Memphis, Tennessee. This facility was not operational
from the date of the fire and explosion until May 1997, and since
May, 1997, this facility was operational on a limited basis. PFM
received settlements from its insurance carrier of approximately
$522,000, less a $25,000 deductible, as to claims for loss of
contents, and $1,475,000 as to its claims for business interruption
due to the fire and explosion. As a result of the significant
disruption and the cost to rebuild and operate the PFM facility, in
February 1998, PFM discontinued its fuel blending operations at the
PFM facility, which represented the principal line of business for
PFM prior to the fire and explosion. PFM entered into an agreement
with the appropriate agency of the state of Tennessee to cease fuel
blending at the facility. PFM intends to operate such facility
only to store hazardous and non-hazardous waste which it is
permitted to store and to operate such facility as a transfer
facility, which will require PFM to develop new markets and
customers for this facility.
Potential Environmental Liability and Certain Environmental
Expenditures
In May 1995, PFM, a subsidiary of the Company which was
purchased in December 1993 and was formerly known as American
Resource Recovery Corporation ("ARR"), became aware that the U.S.
District Attorney for the Western District of Tennessee and the
Department of Justice (the "DOJ") were investigating certain prior
activities of W & R Drum Company ("Drum"), its successor, First
Southern Container Company, and any other facility owned or
operated, in whole or in part, by Johnnie Williams. In May and
September 1995, PFM received a Grand Jury Subpoena which demanded
the production of any documents in the possession of PFM pertaining
to Drum, First Southern Container Company, or any other facility
owned or operated, and held in part, by Johnnie Williams. PFM
complied with each Grand Jury Subpoena. In December 1995,
representatives of the DOJ advised PFM that it was also currently
a subject of the investigation involving Drum, First Southern
Container Company, and/or Johnnie Williams. Since December 1995,
PFM has not heard from, or been in contact with, the DOJ regarding
this investigation. In accordance with certain provisions of the
Agreement and the Plan of Merger relating to the prior acquisition
of PFM, on or about January 2, 1996, PFM notified Ms. Billie K.
Dowdy, the sole shareholder of PFM prior to its acquisition by the
Company, of the foregoing, and advised her that the Company and PFM
would look to Ms. Dowdy to indemnify, defend and hold the Company
and PFM harmless from any liability, loss, damage or expense
incurred or suffered as a result of, or in connection with, this
matter.
In January 1998, the Environmental Protection Agency ("EPA")
informed PFM that it believes that PFM is a potentially responsible
party ("PRP"), regarding the remediation of the site operated by
Drum ("Drum Site"), primarily as a result of acts by ARR prior to
the time ARR was acquired by the Company. The EPA estimated the
remediation costs incurred by the EPA for the Drum Site to be
approximately $1,400,000 as of November 30, 1997, and the EPA has
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<PAGE>
orally informed the Company that such remediation has been
substantially complete as of such date. Because the Comprehensive
Environmental Response Compensation and Liability Act ("CERCLA")
provides that liability for PRPs for a particular Site in an action
brought by the federal government is joint and several, the PRP
Letter includes a demand by the EPA from PFM for the full amount of
the remediation of the Drum Site, including interest on such
amount, as provided for in CERCLA (as defined in " Governmental
Regulations"). In addition, the EPA has advised PFM that it has
informed approximately 50 other companies and individuals that they
are PRPs regarding the Drum Site, and the EPA is making demand upon
such other companies and individuals for reimbursement of its
remediation cost regarding the Drum Site. In addition, the EPA has
orally advised PFM that it believes that PFM provided a substantial
amount of drums to the Drum Site. During the second quarter of
1998, PFM and certain other alleged PRPs began negotiating with the
EPA regarding a potential settlement of the EPA's claims regarding
the Drum Site, and such negotiations are currently continuing. If
PFM cannot reach a settlement which PFM believes is reasonable, it
will continue to vigorously defend against the EPA's demand
regarding remediation costs of the Drum Site. The Company has
notified certain of the previous owners of ARR that the Company
will seek recovery from them as PRPs in the event PFM is determined
to be a PRP regarding the Drum Site, however, no assurance can be
made that PFM will be able to recover remediation costs from such
previous owners. If PFM is determined to be liable for all or a
substantial portion of the remediation cost incurred by the EPA at
the Drum Site, such could have a material adverse effect on the
Company. See "--Governmental Regulation."
For 1998, the Company budgeted capital expenditures of
approximately $1,950,000 to improve operations, reduce the cost of
waste processing and handling, expand the range of wastes that can
be accepted for treatment and processing, maintain permit
compliance at its various TSD facilities and $1,045,000 to comply
with federal, state, and local regulations in connection with
remediation activities by PFD at the Leased Property (as defined
below) and the PFM facility. The Company believes that these
expenditures are necessary to remain competitive or to maintain
compliance with federal, state or local environmental requirements.
The Company anticipates financing these expenditures by, without
limitation, a combination of lease financing to the extent allowed
under the Company's loan agreements, utilization of the equity
raised in the RBB Series 10 Private Placement (as such term is
defined in "Private Placements and Exchange Agreements"), funds
generated internally and other sources.
PFD is required to remediate a parcel of formerly leased
property ("Leased Property"), which Leased Property was previously
operated as a RCRA storage and solvent recycling facility by a
company that was merged with PFD prior to the Company's acquisition
of PFD. The Leased Property contains certain contaminated waste in
the soils and groundwater. The Company was indemnified by the
entity which sold PFD (the "Seller") to the Company for costs
associated with remediating the Leased Property, which entails
remediation of soil and/or groundwater restoration. However, the
Seller filed for bankruptcy in 1995. Prior to the acquisition of
PFD by the Company, the Seller had established a trust fund ("Trust
Fund") to support the remedial activity on the Leased Property
pursuant to an agreement with the Ohio Environmental Protection
Agency ("Ohio EPA"). The Trust Fund was funded with the Seller's
stock. The value of the Seller's stock subsequently declined and
the stock was sold by the Trustee of Trust Fund after the Company's
acquisition of PFD and prior to the Seller's bankruptcy filing.
The decline in the value of the Seller's stock resulted in a
shortfall in the value of the Trust Fund, and the Company was
required to deposit $250,000 into the Trust Fund. The balance in
the Trust Fund was approximately $376,000 as of July 31, 1998. The
Company has accrued approximately $420,000 for the estimated costs
of remediating the Leased Property, which process is estimated to
extend over a period of three to five years. While the Company
believes that its expenditures towards remediation of the Leased
Property will not have a material adverse effect upon the Company,
no assurance can be made that the remediation process will not
prove to be more difficult or costly than anticipated or that the
Company's remediation expenditures will not have a material adverse
effect on the Company's operations and financial condition.
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<PAGE>
Prior to the Company's acquisition of PFM, gasoline had been
detected in the groundwater at the PFM facility. In the
acquisition process, the Company assumed certain liabilities to
remediate gasoline contaminated groundwater and to investigate
potential areas of soil contamination at the PFM facility. The
previous owners of PFM installed monitoring and treatment equipment
to restore the groundwater to acceptable standards in accordance
with federal, state and local authorities. The Company is
continuing this restoration process and anticipates expenditures of
approximately $970,000 over the next five to ten years to remediate
the prior contamination.
The PFM facility is situated in the vicinity of the Memphis
Defense Depot (the "Defense Facility"). The Defense Facility is
listed as a Superfund site. The Defense Facility is adjacent to
the Allen Well Field utilized by Memphis Light, Gas & Water to
provide public water to Memphis, Tennessee. Chlorinated compounds
have been detected in the groundwater beneath the Defense Facility,
as well as in a limited number of certain production wells in the
Allen Well Field. Very low concentrations of certain chlorinated
compounds also have been detected in the groundwater beneath the
PFM facility. The Company is currently investigating the possible
presence of these compounds. Based upon a study performed by the
Company's environmental engineering group, the Company does not
believe the PFM facility is the source of the chlorinated compounds
in the Allen Well Field. Accordingly, the Company does not believe
that the presence of the low concentrations of chlorinated
compounds at the PFM facility will have a material adverse effect
upon the Company. If the Company is determined to be the source of
such contamination, any liabilities, obligations to remediate, or
penalties associated with such contamination, could have a material
adverse effect upon the Company.
The fire and explosion at the PFM facility caused limited
contamination in the soil at the facility. PFM has remediated or
is in the process of remediating the contamination caused by the
fire and explosion, and the Company does not believe that such
remediation will have a material adverse effect on the Company.
Insurance
The Company currently maintains general liability insurance
coverage of $1 million per occurrence, with $2 million in the
aggregate plus an additional $6 million excess umbrella coverage.
In addition, the Company carries contractors' operations and
professional liability coverage of $2 million per occurrence and $4
million in the aggregate. The Company is required by EPA
regulations to carry environmental impairment liability insurance
providing coverage for off-site damages on a "claims made" basis in
amounts of at least $1 million per occurrence and $2 million per
year in the aggregate. To meet the requirements of customers, the
Company has doubled these coverage amounts to $2 million per
occurrence and $4 million per year in the aggregate. In addition,
the deep well operated by PFTS located in Tulsa, Oklahoma, carries
environmental impairment liability insurance of $4 million per
occurrence and $8 million per year in the aggregate. The cost of
the Company's insurance is substantial and is expected to increase.
See "Risk Factors--Insurance."
Governmental Regulation
Various federal, state and local laws and regulations have
been enacted regarding the handling and management of waste. These
laws create liability for environmental contamination caused by
such handling and management. The Company will likely be subject
to extensive compliance review by federal, state and local
environmental regulatory authorities. The Company has implemented
or intends to implement procedures at each of its facilities
designed to help assure compliance with applicable environmental
laws and regulations. Noncompliance with environmental laws and
regulations, including failure to implement required procedures
regarding such laws and regulations, could result in civil or
criminal enforcement actions or private actions, mandatory cleanup
requirements, revocation of required permits or licenses, denial of
applications for future permits, or significant fines, penalties or
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<PAGE>
damages, any of which could have a material adverse effect on the
Company, its operations and financial condition.
In connection with the Company's waste management services,
the Company may generate from time to time both hazardous and non-
hazardous waste which it transports to other facilities for
destruction or disposal. The Company also acts as a broker for
customers in connection with the transportation, treatment and/or
disposal of hazardous and non-hazardous waste. As a generator or
broker of hazardous substances delivered to a disposal facility,
the Company could be a PRP notwithstanding any absence of fault on
the part of the Company. If the Company were deemed a responsible
party, it could be subject to substantial clean-up costs, fines and
penalties. Specifically, liability is joint and several under
CERCLA, which authorizes the EPA or a private party to require
companies to remediate contaminated or polluted sites.
Accordingly, the Company could be held responsible under CERCLA for
clean-up costs at a site as to which it is deemed a responsible
party regardless of its proportionate responsibility for the site
pollution. While the Company believes that, as a practical matter,
the EPA and the courts attempt to allocate clean-up costs for a
site among the various potentially responsible parties, no
assurance can be made that such allocation would occur if the
Company is deemed a responsible party for a clean-up site. If the
Company is deemed a responsible party regarding one or more sites,
the resulting liability could have a material adverse effect on the
Company's operations and financial condition. Further, the Company
will be liable to remediate sites on which it operates its
hazardous waste treatment, storage and disposal ("TSD") facilities
under the Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), if such sites become contaminated. The Company
is, as of the date of this Prospectus, remediating one site on
which it operates a RCRA permitted treatment and storage facility
that became contaminated prior to being acquired by the Company in
1993 and one site that was leased by a company subsequently
acquired by the Company in 1994. Additionally, the Company has
been notified in writing by the EPA that the EPA has determined
that PFM is a PRP as to the Drum Site and, consequently, the EPA is
demanding reimbursement for the remediation. Currently, PFM is
negotiating with the EPA regarding a potential settlement of the
EPA's claims regarding the remediation costs of the Drum Site. See
"Potential Environmental Liability and Certain Environmental
Expenditures" and "Risk Factors Potential Environmental Liability."
Except as disclosed in " Potential Environmental Liability and
Certain Environmental Expenditures," the Company believes that it
is currently in substantial compliance with applicable laws, rules
and regulations imposed on the Company by governmental authorities
having jurisdiction over the Company's activities. However, no
assurance can be made that the Company will not be found to be out
of compliance with applicable laws, rules and regulations, which
could result in the loss of one or more of the Company's permits or
subject the Company to substantial fines, penalties or other
liabilities that could have a material adverse impact on the
Company's business.
Permits and Licenses
The Company's business is subject to extensive, evolving and
increasingly stringent federal, state and local environmental laws
and regulations. Such federal, state and local environmental laws
and regulations govern the Company's activities regarding the
treatment, storage, recycling, blending, disposal and
transportation of hazardous, non-hazardous and low level
radioactive waste. These laws and regulations require the Company
to obtain and maintain permits, licenses and/or approvals in order
to conduct its hazardous, non-hazardous and low-level radioactive
waste activities. Failure to obtain and maintain such permits or
approvals would have a material adverse effect on the Company, its
operations and financial condition. There can be no assurance that
the Company will be able to maintain its currently held permits and
approvals, and as the Company continues to expand its operations
there can be no assurance that the Company will be able to obtain
any additional approvals or permits which may be required. See "--
Governmental Regulation" and "Risk Factors--Governmental
Regulation."
PFTS provides transportation, treatment, storage and disposal
of liquid hazardous and non-hazardous wastes, stabilization of
liquid and solid drum residues, and deepwell injection services to
manufacturing companies located generally in the southwestern
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portion of the United States. Prior to disposal of the liquid
waste in the deepwell, all hazardous liquids are processed in a
manner designed to destroy or eliminate the hazardous
characteristics of the liquids. These liquids, along with non-
hazardous liquids, can be injected into the deep well that has been
specifically designed and constructed for this purpose. PFTS has
a final RCRA permit to store and treat hazardous waste at its
facility. PFTS operates its non-hazardous waste deepwell under a
permit issued by the State of Oklahoma.
PFM has discontinued its fuel blending operations but is
continuing to provide storage and transfer facilities for hazardous
and non-hazardous waste generators throughout the United States.
See " Facility Disruption." PFM operates its container storage
facility under a final RCRA permit.
PFF handles hazardous and non-hazardous waste, low level
radioactive waste and mixed waste (waste containing both hazardous
and low level radioactive waste) and treatment of waste liquid
scintillation vials, a mixed low-level radioactive/hazardous
(flammable) waste used primarily by the medical research and
treatment industry. PFF operates under a final RCRA permit and a
low level radioactive license issued by the appropriate authorities
of the State of Florida. PFF's low-level radioactive license was
issued on August 18, 1995, and subsequently amended to allow
expanded low-level radioactive waste management activities. It is
intended that the New Process ("discussed under "-- New Process")
will operate under existing permits granted to PFF, and, as a
result, the operations of the New Process will be limited. The
Company is currently exploring expanded uses of the New Process,
which expanded uses may require additional or modified permits and
involve expenditures of certain of the Company's resources to
accomplish. There is no assurance that PFF can obtain the
additional or modified permits to expand the uses of the New
Process.
PFD operates a permitted hazardous waste treatment and storage
facility to collect and treat oily waste waters and used oil from
both small and large quantity generators. PFD also provides
hazardous waste treatment services for collecting and processing
organic solvents, sludges, and solids for use as secondary fuels in
cement kilns. PFD operates under a final RCRA permit.
The Company believes that its TSD facilities have, as of the
date of this Prospectus, obtained all approvals, licenses and
permits necessary to enable it to conduct its business as presently
conducted. The failure of the Company's TSD facilities to renew
any of their present approvals, licenses and permits, or the
termination of any such approvals, licenses or permits, could have
a material adverse effect on the Company, its operations and
financial condition. See "Risk Factors--Governmental Regulation."
As an alternative to off-site waste treatment and disposal
methods, PFI conducts waste treatment services at the site of the
waste generator. PFI's services include converting certain types
of characteristic hazardous wastes into non-hazardous waste and
treating non-hazardous waste. The Company believes that PFI's on-
site waste treatment services do not require federal environmental
permits provided certain conditions are satisfied. PFI has
received written verification from each state in which it is
presently operating that no such permit is required provided
certain conditions are satisfied. Neither PFI nor the Company has,
however, received any such verification from the federal
government. There can be no assurance that states in which PFI
presently does business or the federal government will not enact
policies or regulations requiring PFI to obtain permits to conduct
its on-site activities.
Competitive Conditions
The Company competes with numerous companies which are able to
provide one or more of the environmental services offered by the
Company. Many of the Company's competitors have greater financial,
human and other resources than the Company. The increased
competition within certain segments of the waste management
industry has resulted in reduced gross margin levels for such
segments which are likely to reduce further due to several factors:
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(a) more companies entering the market as the industry matures; (b)
the likely expansion of the range of services offered by current
and future competitors of the Company; (c) the current efforts of
companies and governmental authorities to encourage waste
minimization policies, and (d) fewer underserved markets available
for Company expansion as the Company and its competitors move into
new geographic markets. The increased competition and reduced
gross margin levels could have a material adverse effect on the
business and financial condition of the Company. See "Risk Factors
- --Competition."
The Company believes that it is a significant participant in
the delivery of off-site waste treatment services in the Southeast,
Midwest and Southwest. The Company competes with TSD facilities
operated by national, regional and independent environmental
services firms located within a several hundred mile radius of the
Company's facilities.
The Company's competitors for remediation services include
national and regional environmental services firms that may have
larger environmental remediation staffs and greater resources than
the Company. The Company recognizes its lack of financial
resources necessary to compete for larger remediation contracts.
Accordingly, the Company presently concentrates on remediation
services projects within its existing customer base or projects in
its service area which are too small for companies without a
physical presence in the market to perform competitively.
Environmental engineering and consulting services provided by
the Company through its engineering companies involve competition
with larger engineering and consulting firms. The Company believes
that it is able to compete with these firms based on its
established reputation in its market areas and its expertise in
several specific elements of environmental engineering and
consulting such as cement kiln waste recycling programs.
The Company believes that the barriers of entry for companies
seeking to compete with the Company in the waste management
industry are dependent upon the specific service to be offered.
Consequently, the Company believes that its operations which
provide certain services are more likely to encounter increased
competition in the future. The Company believes that there are no
formidable barriers to entry into the on-site treatment business
within which the Company operates. Similarly, certain of the
Company's non-hazardous waste operations engage in businesses which
do not present any formidable barriers of entry. However, the
Company believes that the permitting requirements and the cost to
obtain such permits may be barriers of entry into the business of
providing hazardous and low-level radioactive waste TSD facilities
as presently operated by the Company. The Company's business of
providing low level radioactive and hazardous waste recycling of
liquid scintillation vials requires both a radioactive permit and
a hazardous waste RCRA permit, and the Company believes that this
dual permitting requirement is a substantial barrier of entry. The
Company believes that only one other facility in the United States
currently provides low level radioactive and hazardous waste
recycling of liquid scintillation vials. If the permit
requirements for hazardous waste TSD activities and/or the handling
of low level radioactive materials are eliminated or if such
permits become easier to obtain, the Company believes that more
companies will enter these markets and provide greater competition
to the Company, which could have a material adverse effect on the
Company, its operations and financial condition.
The Company believes that consumers of waste management
services currently focus primarily on the quality and timeliness of
service. However, the Company anticipates that price will become
an increasingly important competitive factor as the industry
matures. Accordingly, the revenues generated from, and the
profitability of, certain of the Company's services may be reduced
as price competition intensifies. This reduction could have a
material adverse effect on the business and financial condition of
the Company. Many of the Company's competitors are larger and more
established, with greater marketing, financial, human and other
resources than the Company. These competitors will provide
significant long-term competition. The Company also expects
competition to intensify as technological and other advances are
made in the waste treatment fields and as public awareness of the
hazardous waste disposal problem increases.
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Centofanti Employment Agreement
Effective October 1, 1997, Dr. Centofanti entered into the
Centofanti Employment Agreement with the Company which is for a
term of three (3) years and provides for, among other things, an
annual salary of $110,000 and the issuance of Non-Qualified Stock
Options ("Non-Qualified Stock Options"). The Non-Qualified Stock
Options provide Dr. Centofanti with the right to purchase an
aggregate of 300,000 shares of Common Stock in the form of (i)
after one year 100,000 shares of Common Stock at a price of $2.25
per share, (ii) after two years 100,000 shares of Common Stock at
a price of $2.50 per share, and (iii) after three years 100,000
shares of Common Stock at a price of $3.00 per share. The Non-
Qualified Stock Options expire ten years after the date of the
Centofanti Employment Agreement.
Availability of Company's Loss Carryovers
The Company anticipates that its cash flow in future years
will benefit from its ability to utilize net operating loss ("NOL")
carryovers from prior periods. The NOL carryovers should reduce
the federal income tax payments which the Company will otherwise be
required to make with respect to income generated in future years.
Based upon its federal income tax returns as filed with the IRS for
taxable years through 1996 and the Company's net loss for 1997, the
Company estimates that it had on a consolidated basis available NOL
carryovers of approximately $9,800,000 at December 31, 1997, for
federal income tax purposes. These NOL carryovers will expire to
the extent not utilized by the years 2006 through 2011. See "Risk
Factors--Loss Carryovers."
The amount of NOL carryovers has not been audited or approved
by the IRS and no assurance can be given that such carryovers will
not be reduced as a result of future audits. In addition, the
ability of the Company to utilize these carryovers in the future
will be subject to a variety of limitations applicable to corporate
taxpayers generally under both the Internal Revenue Code of 1986,
as amended (the "Code"), and the Treasury Regulations. These
include, in particular, limitations imposed by Code Section 382
("382 Limitations").
The 382 Limitations provide certain limitations on the
utilization of NOL carryovers following a more than 50% change (by
value) in the stock ownership of company. In general, the 382
limitations apply when, within a three year "testing period", there
is a more than 50 percentage point increase in the stock of a
company that has an NOL held by one or more persons who own
(directly or constructively) at least 5% of such Company's stock
(with persons who separately are less than 5% shareholders
generally being treated in the aggregate as a single shareholder)
over the lowest percentage of stock of such company owned by such
person(s) at any time during the testing period. The amount of the
percentage point increase in stock ownership is calculated for each
5% shareholder, and the increase of each 5% shareholder is
aggregated with the increases of other 5% shareholders to determine
the total percentage point increase in stock ownership. For
purposes of these tests, stock issuable upon the exercise of
certain options and warrants or upon the conversion of preferred
stock may be treated as outstanding.
The use of approximately $6,300,000 of the approximate
$9,800,000 in NOL carryovers as of the taxable year ending December
31, 1997, is limited to a certain extent in future years by reason
of certain acquisitions and the issuance of various series of
preferred stock of the Company, excluding the Series 10 Preferred.
See "Private Placements and Exchange Agreements." Each taxable
year after 1997, approximately $1,500,000 of the approximate
$6,300,000 in 382 Limitations is no longer limited, and after five
years, all of the approximate $9,800,000 in NOL carryovers will be
available for use by the Company for federal income tax purposes,
except to the extent such has been previously used to reduce the
Company's federal income tax payments or such has been reduced by
the IRS in connection with audits conducted by the IRS. These
amounts are based upon preliminary analysis of the Company's 382
limitations and are subject to change.
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PRIVATE PLACEMENTS AND EXCHANGE AGREEMENTS
RBB Series 4 Private Placement
On or about June 11, 1997, the Company issued to RBB Bank
2,500 shares of newly-created Series 4 Class D Convertible
Preferred Stock, par value $.001 per share (the "Series 4
Preferred") at a price of $1,000 per share, for an aggregate sales
price of $2,500,000 ("RBB Series 4 Private Placement"). The sale
to RBB Bank was made in a private placement under Section 4(2) of
the Securities Act and/or Rule 506 of Regulation D under the
Securities Act, pursuant to the terms of a Subscription and
Purchase Agreement, dated June 9, 1997, between the Company and RBB
Bank ("RBB Series 4 Subscription"). As part of the sale of the
Series 4 Preferred, the Company also issued to RBB Bank certain
warrants ("Series 4 Warrants") entitling RBB Bank to purchase,
after December 31, 1997 and until June 9, 2000, an aggregate of up
to 375,000 shares of Common Stock, subject to certain antidilution
provisions, with 187,500 shares exercisable at a price equal to
$2.10 per share and 187,500 shares exercisable at a price equal to
$2.50 per share. The Company received net proceeds of
approximately $2,287,500 under the RBB Series 4 Private Placement
after the payment of placement fees and legal fees. The Company
used the net proceeds from the RBB Series 4 Private Placement to
reduce the outstanding balance under its then existing revolving
credit facility.
In connection with the RBB Series 4 Private Placement, the
Company paid fees (excluding legal and accounting) of $200,000 to
JW Genesis Financial Corporation ("JW Genesis") (f/k/a JW Charles
Financial Services, Inc.), the investment banking firm that handled
the RBB Series 4 Private Placement, and issued to JW Genesis two
warrants, each dated June 9, 1997, entitling JW Genesis to purchase
(a) until June 9, 2000, up to 200,000 shares of Common Stock at an
exercise price of $2.00 per share, subject to certain antidilution
provisions; and (b) until June 9, 2002, up to 100,000 shares of
Common Stock, at an exercise price of $1.50 per share, subject to
certain antidilution provisions (collectively, the "Series 4
Genesis Warrants"). Under the terms of the Series 4 Genesis
Warrants, JW Genesis is entitled to certain registration rights
with respect to the shares of Common Stock issuable on the exercise
of each warrant.
In connection with the RBB Series 4 Private Placement, the
Company issued (i) two warrants to Karl H. Ehlert, each to purchase
175,000 shares of Common Stock for five years, with the first
having an exercise price of $2.00 per share and the second having
an exercise price of $3.00 per share (the "Ehlert Warrants"); (ii)
two warrants to R. Keith Fetter, each allowing the purchase of up
to 75,000 shares of Common Stock for three years, with the first
having an exercise price of $2.00 per share and the second having
an exercise price of $2.50 per share (the "Fetter Warrants") (the
Ehlert Warrants and Fetter Warrants are collectively referred to as
the "Service Warrants"); and (iii) one warrant, dated as of
September 16, 1997, issued by the Company to Dionysus Limited
("Dionysus"), an Isle of Man corporation, allowing the purchase of
up to an aggregate of 100,000 shares of Common Stock and
exercisable for three years at $1.70 per share ("Dionysus
Warrant"). These warrants were issued for various consulting
services rendered to the Company.
First RBB Exchange Agreement
Pursuant to the Exchange Agreement, dated November 6, 1997,
but effective as of September 16, 1997 (the "First RBB Exchange
Agreement"), the Company and RBB Bank exchanged the 2,500 shares of
Series 4 Preferred and the Series 4 Warrants for (i) 2,500 shares
of Series 6 Preferred, (ii) two warrants each allowing the purchase
of up to 187,500 shares of Common Stock at an exercise price of
$1.8125 per share, and (iii) one warrant to purchase 281,250 shares
of Common Stock at an exercise price of $2.125 per share
(collectively, the "Series 6 Warrants"), pursuant to an exemption
from registration under Section 4(2) of the Securities Act. The
Series 6 Warrants may be exercised at any time after December 31,
1997, and until June 9, 2000. The Company paid RBB Bank the
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dividends on the Series 4 Preferred that accrued from the date of
issuance until September 16, 1997, the effective date of the RBB
Exchange Agreement by issuing to RBB Bank 14,165 shares of Common
Stock pursuant to the terms of the Series 4 Preferred, which shares
of Common Stock are covered by this Prospectus.
The rights under the Series 6 Preferred were the same as the
rights under the Series 4 Preferred, except for certain conversion
rights. The Series 6 Preferred provided that the conversion price
per share is $1.8125, except that, in the event the average closing
bid price of the Common Stock as reported in the over-the-counter
market, or the closing sale price if listed on a national
securities exchange, for 20 of any 30 consecutive trading days
after March 1, 1998, shall be less than $2.50, the conversion price
shall thereafter be the lesser of (i) the average closing bid
quotation of the Common Stock as reported on the over-the-counter
market, or the closing sale price if listed on a national
securities exchange for the five trading days immediately preceding
the date of the conversion notice provided by the holder to the
Company multiplied by 80% or (ii) $1.8125. Notwithstanding the
foregoing, the conversion price shall not be less than a minimum of
$.75 per share, which minimum shall be eliminated from and after
September 6, 1998.
Pursuant to the First RBB Exchange Agreement, the Company
agreed to prepare and file with the Commission by October 27, 1997,
a Registration Statement covering up to 1,379,311 shares of Common
Stock issuable upon conversion of the Series 6 Preferred, plus up
to 250,000 shares of Common Stock issuable in payment of dividends
on the Series 6 Preferred pursuant to the terms of the Series 6
Preferred, and up to 656,250 shares of Common Stock issuable upon
exercise of the Series 6 Warrants. Such Registration Statement was
filed on December 23, 1997. The Company has also agreed in the
First RBB Exchange Agreement to use its reasonable efforts to cause
the Registration Statement to become effective at the earliest
possible date after filing. The First RBB Exchange Agreement
provides that if the Registration Statement is not declared
effective by December 31, 1997, the Company agreed to pay to RBB
Bank a penalty of one-tenth of one percent (0.1%) of $2,500,000 for
each business day thereafter which ends without the Registration
Statement becoming effective and if the Registration Statement is
not effective by January 31, 1998, the Company agreed to pay RBB
Bank an additional one-time penalty of two percent (2.0%) of
$2,500,000 payable in cash or Common Stock. The registration
requirements and penalties set forth in the First RBB Exchange
Agreement regarding the Series 6 Preferred are applicable to the
Series 8 Preferred. By letter ("RBB Letter") dated July 14, 1998,
the Company and RBB Bank agreed to settle, in connection with the
RBB Bank Series 10 Private Placement, any potential claims against
the Company for penalties as a result of the Company not filing the
Registration Statement with the Commission by October 27, 1997 or
due to the Registration Statement not being declared effective by
December 31, 1997 or January 31, 1998. The RBB Letter states that
the penalties regarding the First RBB Exchange Agreement will again
begin to accrue if the Registration Statement is not declared
effective by November 12, 1998.
Once the Registration Statement becomes effective, if it
subsequently becomes ineffective before September 16, 2000, the
First RBB Exchange Agreement provides that the Company shall pay to
RBB Bank a penalty of $1.00 for each outstanding share of Series 6
Preferred for each business day that the Registration Statement is
not effective. If such ineffectiveness extends for thirty days,
the Company shall pay to RBB Bank a one-time penalty of $20.00 for
each share of Series 8 Preferred outstanding on the thirtieth day.
Under the terms of the Series 6 Warrants, if the Company
declares or pays, without consideration, any dividend on the Common
Stock payable in Common Stock, or effects a subdivision of the
outstanding shares of Common Stock into a greater number of shares
of Common Stock (by stock split, reclassification or otherwise than
by payment of a dividend in Common Stock or in any right to acquire
Common Stock), or if the outstanding shares of Common Stock are
combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the number of shares
of Common Stock issuable upon the exercise of such warrant or the
exercise price of such warrant will be adjusted appropriately. As
a result of such adjustment, the proportionate number of shares of
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Common Stock issuable immediately prior to the happening of such
event will be the number of shares of Common Stock issuable
subsequent to the happening of such event. If at any time the
shares of Common Stock covered by the Series 6 Warrants are covered
by an effective registration statement and the average closing bid
price of the Common Stock for ten consecutive trading days is in
excess of $3.50 with respect to half of the Series 6 Warrants or in
excess of $4.00 with respect to the other half of the Series 6
Warrants, then the Company will have the option to redeem the
respective Series 6 Warrants for $0.01 per share of Common Stock
covered by the Series 6 Warrants. The holder of the Series 6
Warrants will have the option to exercise the Series 6 Warrants
prior to redemption by the Company. Under the terms of the Series
6 Warrants, the Common Stock issuable upon conversion of the Series
6 Warrants is subject to certain registration rights.
The Series 6 Warrants are entitled to certain rights upon any
consolidation or merger of the Company in which the Company is not
the surviving entity, or in case of any sale or conveyance by the
Company to another entity of all or substantially all of the
property of the Company as an entirety or substantially as an
entirety. Upon any such event, the holder of the Series 6 Warrants
will have the right, upon exercise of such warrants, to receive the
kind and amount of securities, cash or other property which the
holder of the Series 6 Warrants would have owned or been entitled
to receive immediately after such consolidation, merger, sale or
conveyance had such warrants been exercised in full immediately
prior to the effective date of such consolidation, merger, sale or
conveyance.
The shares of Common Stock issuable upon exercise of the 1996
RBB Warrants are covered by an effective registration statement.
Second RBB Exchange Agreement
Pursuant to the Exchange Agreement, dated April 30, 1998, but
to be considered effective as of February 28, 1998 (the "Second RBB
Exchange Agreement"), the Company and RBB Bank exchanged the 2,500
shares of Series 6 Preferred for 2,500 shares of Series 8
Preferred, pursuant to an exemption from registration under Section
3(a)(9) and/or Section 4(2) of the Securities Act. Except for the
Exchange of Series 6 Preferred for the Series 8 Preferred and
termination of any and all rights RBB Bank may have under the
Series 6 Preferred, the Second RBB Exchange Agreement does not
terminate the First RBB Exchange Agreement. In addition, the
Series 6 Warrants were not affected by the Second RBB Exchange
Agreement. The Company paid to RBB Bank the dividends on the
Series 6 Preferred which accrued from the date of issuance through
February 28, 1998, the effective date of the Second RBB Exchange
Agreement, by issuing to RBB Bank 7,652 shares of Common Stock,
which shares of Common Stock are covered by this Prospectus.
The rights of the Series 8 Preferred are the same as the
rights under the Series 6 Preferred, except for the conversion
price. The Series 8 Preferred is convertible at a conversion price
of $1.8125 per share, except that, in the event the average closing
bid price of the Common Stock as reported in the over-the-counter
market, or the closing sale price if listed on a national
securities exchange, for the five (5) trading days prior to a
particular date of conversion, shall be less than $2.50, the
conversion price for only that particular conversion shall be the
average of the closing bid quotations of the Common Stock as
reported on the over-the-counter market, or the closing sale price
if listed on a national securities exchange, for the five (5)
trading days immediately preceding the date of such particular
conversion notice provided by the holder to the Company multiplied
by 80%. Notwithstanding the foregoing, the conversion price shall
not be less than a minimum of $.75 per share, which minimum shall
be eliminated from and after September 6, 1998. See "--First RBB
Exchange Agreement."
The Series 8 Preferred is not entitled to any voting rights,
except as required by law. The Series 8 Preferred has a
liquidation preference over the Common Stock equal to $1,000
consideration per outstanding share of Series 8 Preferred (the
"Series 8 Liquidation Value"), plus an amount equal to all unpaid
dividends accrued thereon. The Series 8 Preferred accrues
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dividends on a cumulative basis at a rate of 4% per annum of the
Liquidation Value ("Series 8 Dividend Rate"), and is payable semi-
annually when and as declared by the Board of Directors. No
dividends or other distributions may be paid or declared or set
aside for payment on the Common Stock until all accrued and unpaid
dividends on all outstanding shares of Series 8 Preferred have been
paid or set aside for payment. Dividends may be paid, at the
option of the Company, in the form of cash or Common Stock of the
Company if and when declared by the Board of Directors. If the
Company pays dividends in Common Stock, such is payable in the
number of shares of Common Stock equal to the product of (a) the
quotient of (i) the Series 8 Dividend Rate divided by (ii) the
average of the closing bid quotation of the Common Stock as
reported on the NASDAQ for the five trading days immediately prior
to the date the dividend is declared, multiplied by (b) a
fraction, the numerator of which is the number of days elapsed
during the period for which the dividend is to be paid and the
denominator of which is 365.
The Company will have the option to redeem the shares of
Series 8 Preferred (a) between June 11, 1998, and June 11, 2001, at
a redemption price of $1,300 per share if at any time the average
closing bid price of the Common Stock for ten consecutive trading
days is in excess of $4.00, and (b) after June 11, 2001, at a
redemption price of $1,000 per share. The holder of the Series 8
Preferred Stock will have the option to convert the Series 8
Preferred prior to redemption by the Company. See "Summary of
Securities Being Offered"; "Risk Factors--Voting Control; Ability
to Direct Management."
If the Company at any time or from time to time while shares
of Series 8 Preferred are issued and outstanding declares or pays,
without consideration, any dividend on the Common Stock payable in
Common Stock, or effects a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
stock split, reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire Common Stock),
or if the outstanding shares of Common Stock are combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, then the conversion price in
effect immediately before such event will, concurrently with the
effectiveness of such event, be proportionately decreased or
increased, as appropriate. If the Company declares or pays,
without consideration, any dividend on the Common Stock payable in
any right to acquire Common Stock for no consideration, then the
Company will be deemed to have made a dividend payable in Common
Stock in an amount of shares equal to the maximum number of shares
issuable upon exercise of such rights to acquire Common Stock.
RBB Series 10 Private Placement
The Company issued to RBB Bank 3,000 shares of newly-created
Series 10 Preferred at a price of $1,000 per share, for an
aggregate sales price of $3,000,000 ("RBB Series 10 Private
Placement"). The sale to RBB Bank was made in a private placement
under Section 4(2) of the Securities Act and/or Rule 506 of
Regulation D under the Securities Act, pursuant to the terms of a
Private Securities Subscription Agreement, dated June 30,1998
between the Company and RBB Bank ("Series 10 Subscription"). As
part of the sale of the Series 10 Preferred, the Company also
issued to RBB Bank certain warrants ("Series 10 Warrants")
entitling RBB Bank to purchase until three years after June 30,
1998, an aggregate of up to 350,000 shares of Common Stock, subject
to certain antidilution provisions, with 200,000 shares exercisable
at a price equal to $1.875 per share and 150,000 shares exercisable
at a price equal to $2.50 per share. The Company received net
proceeds of approximately $2,768,000 from this private placement,
after the deduction for certain commissions and expenses other than
certain legal and other expenses incurred by the Company.
The Series 10 Preferred has a liquidation preference over the
Company's Common Stock equal to $1,000 consideration per
outstanding share of Series 10 Preferred (the "Series 10
Liquidation Value"), plus an amount equal to all unpaid and accrued
dividends thereon. The Series 10 Preferred accrues dividends on a
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cumulative basis at a rate of four percent (4%) per annum of the
Series 10 Liquidation Value ("Series 10 Dividend Rate"), and is
payable semi-annually within ten (10) business days after each
subsequent June 30 and December 31 (each a "Dividend Declaration
Date"), and shall be payable in cash or shares of the Company's
Common Stock at the Company's option. The first Dividend
Declaration Date for the Series 10 Preferred shall be December 31,
1998. No dividends or other distributions may be paid or declared
or set aside for payment on the Company's Common Stock until all
accrued and unpaid dividends on all outstanding shares of Series 10
Preferred have been paid or set aside for payment. Dividends may be
paid, at the option of the Company, in the form of cash or Common
Stock of the Company. If the Company pays dividends in Common
Stock, such is payable in the number of shares of Common Stock
equal to the product of (a) the quotient of (i) the Series 10
Dividend Rate divided by (ii) the average of the closing bid
quotation of the Common Stock as reported on the NASDAQ for the
five trading days immediately prior to the date the dividend is
declared, times (b) a fraction, the numerator of which is the
number of days elapsed during the period for which the dividend is
to be paid and the denominator of which is 365.
The holder of the Series 10 Preferred may convert into Common
Stock any or all of the Series 10 Preferred on and after 180 days
after June 30, 1998. The conversion price per outstanding share of
Preferred Stock ("Series 10 Conversion Price") is $1.875; except
that if the average of the closing bid price per share of Common
Stock quoted on the NASDAQ (or the closing bid price of the Common
Stock as quoted on the national securities exchange if the Common
Stock is not listed for trading on the NASDAQ but is listed for
trading on a national securities exchange) for the five (5) trading
days immediately prior to the particular date on which the holder
notified the Company of a conversion ("Series 10 Conversion Date")
is less than $2.34, then the Conversion Price for that particular
conversion shall be eighty percent (80%) of the average of the
closing bid price of the Common Stock on the NASDAQ (or if the
Common Stock is not listed for trading on the NASDAQ but is listed
for trading on a national securities exchange then eighty percent
(80%) of the average of the closing bid price of the Common Stock
on the national securities exchange) for the five (5) trading days
immediately prior to the particular Series 10 Conversion Date. As
of June 30, 1998, the closing price of Common Stock on the NASDAQ
was $1.875 per share.
Pursuant to the terms of the Series 10 Preferred, in the case
of (a) any consolidation or merger to which the Company is a party,
other than a merger or consolidation in which the Company is the
continuing or surviving corporation ("Merger"), or (b) any sale or
conveyance to another corporation of all or substantially all of
the property of the Company ("Sale") and such Merger or Sale
becomes effective (i) while any shares of Series 10 Preferred are
outstanding and prior to the effectiveness of the Registration
Statement covering the Common Stock issuable upon conversion of the
Series 10 Preferred, the Company shall provide for the holder of
the Series 10 Preferred to have the right to convert the Series 10
Preferred into the kind and amount of shares of stock or other
securities and property receivable upon such Merger or Sale by a
holder of the number of shares of Common Stock into which the
Series 10 Preferred could have been converted into immediately
prior to the Merger or Sale.
In the event of a Merger or Sale, where the Company is not the
survivor, the holder of the Series 10 Preferred shall have the
right to redeem all of the outstanding shares of Series 10
Preferred at 120% of the Series 10 Liquidation Value of each share
of Series 10 Preferred then outstanding plus all accrued and unpaid
dividends (the "Series 10 Redemption Amount"). The Company shall
pay this Series 10 Redemption Amount in cash within ten business
days of receipt by the Company of notice from the holder of the
Series 10 Preferred, and receipt by the Company of all outstanding
shares of Preferred Stock duly endorsed by the Holder to the
Company.
Under the terms of the Series 10 Preferred, if the Company
declares or pays, while any Series 10 Preferred remains
outstanding, any dividend on the Common Stock payable in Common
Stock, or effects a subdivision of the outstanding shares of Common
Stock into a greater number of shares of Common Stock (by stock
split, reclassification or otherwise than by payment of a dividend
in Common Stock or in any right to acquire Common Stock), or if the
outstanding shares of Common Stock are combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
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Common Stock, then the number of shares of Common Stock issuable
upon the exercise of such warrant or the exercise price of such
Series 10 Conversion Price will be adjusted appropriately.
If the Common Stock issuable upon conversion of the Series 10
Preferred shall be changed into the same or a different number of
shares of Common Stock of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination or shares of Common Stock
as described in the previous paragraph), the Series 10 Conversion
Price then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately
adjusted so that the Series 10 Preferred shall be convertible into,
in lieu of the number of shares of Common Stock which the holders
of Series 10 Preferred would otherwise have been entitled to
receive, a number of shares of Common Stock of such other class or
classes of stock equivalent to the number of shares of Common Stock
that would have been subject to receipt by the holders upon
conversion of the Series 10 Preferred immediately before that
change.
Under the terms of the Series 10 Warrants, if the Company
shall (i) declare or pay a dividend in shares of Common Stock or
make a distribution, without receipt of consideration, in shares of
Common Stock to holders of its outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares
of Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of shares of
Common Stock purchasable upon exercise of the Series 10 Warrants
immediately prior thereto shall be adjusted so that the holder of
the Series 10 Warrants shall be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company
which he would have owned or have been entitled to receive had such
Series 10 Warrants been exercised in advance thereof. Upon each
such adjustment of the kind and number of shares of Common Stock or
other securities of the Company which are purchasable hereunder,
the holder of the Series 10 Warrants shall thereafter be entitled
to purchase the number of shares of Common Stock or other
securities resulting from such adjustment at an exercise price
obtained by multiplying the exercise price in effect immediately
prior to such adjustment by the number of shares of Common Stock
purchasable thereto immediately prior to such adjustment and
dividing by the number of shares of Common Stock or other
securities of the Company resulting from such adjustment. Such an
adjustment shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such
event.
The Series 10 Warrants are entitled to certain rights upon any
consolidation or merger of the Company in which the Company is not
the surviving entity, or in case of any sale or conveyance by the
Company to another entity of all or substantially all of the
property of the Company in which the consideration to be received
by the Company or its shareholders consists in whole or in part of
consideration other than cash. Upon any such event, the holder of
the Series 10 Warrants will have the right, upon exercise of such
warrants, to receive the kind and amount of securities, cash or
other property which the holder of the Series 10 Warrants would
have owned or been entitled to receive immediately after such
consolidation, merger, sale or conveyance had such warrants been
exercised in full immediately prior to the effective date of such
consolidation, merger, sale or conveyance.
In connection with the RBB Series 10 Private Placement, the
Company also issued (i) one warrant ("Liviakis Warrant") dated as
of June 30, 1998, to Liviakis Financial Communications, Inc.
("Liviakis") entitling the holder to purchase until June 29, 2002,
up to 1,875,000 shares of Common Stock at an exercise price of
$1.875 per share, (ii) one warrant ("Prag Warrant") dated as of
June 30, 1998, to Robert B. Prag, an executive officer of Liviakis
("Prag"), entitling the holder to purchase until June 29, 2002, up
to 625,000 shares of Common Stock at an exercise price of $1.875
per share, (iii) one warrant ("Series 10 Genesis Warrant") dated as
of June 30, 1998, to JW Genesis entitling the holder to purchase
until June 30, 2001, up to 150,000 shares of Common Stock at an
exercise price of $1.875 per share, and (iv) one warrant ("Fontenoy
Warrant") dated as of June 30, 1998, to Fontenoy Investments
("Fontenoy") entitling the holder to purchase until June 30, 2001,
up to 350,000 shares of Common Stock at an exercise price of
$1.875. The issuance of these warrants to Liviakis, Prag, JW
Genesis and Fontenoy was made in a private placement under Section
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4(2) of the Securities Act and/or Rule 506 of Regulation D as
promulgated under the Securities Act. Each of these warrants is
subject to adjustment pursuant to certain antidilution provisions
and is subject to certain registration rights with respect to the
shares of Common Stock issuable on the exercise of each warrant.
These warrants were issued for various consulting services rendered
to the Company.
Under certain circumstances the Company may not issue shares
of Common Stock upon conversion of the Series 10 Preferred or upon
the exercise of the above described warrants issued in connection
with the Series 10 Preferred without obtaining shareholder
approval. Shareholder approval is required if (i) the aggregate
number of shares of Common Stock issued by the Company pursuant to
the terms of the Series 10 Preferred and certain of such warrants
exceeds 2,388,347 shares of Common Stock (which equals 19.9% of the
outstanding shares of Common Stock of the Company as of June 30,
1998) and (ii) RBB Bank has converted or elects to convert any of
the then outstanding shares of Series 10 Preferred pursuant to the
terms of the Series 10 Preferred at a conversion price of less than
$1.875 ($1.875 being the market value per share of Common Stock as
quoted on the NASDAQ as of the close of business on June 30, 1998),
other than if the Conversion Price is less than $1.875 solely as a
result of the anti-dilution provisions of the Series 10 Preferred,
then the Company must obtain shareholder approval before the
Company can issue any additional shares of Common Stock upon
conversion of the Series 10 Preferred and such warrants. The
requirement for shareholder approval under the conditions discussed
above was provided in order to comply with the requirements of the
NASDAQ Marketplace Rules.
As of the date of this Prospectus, RBB Bank owns of record
970,885 shares of Common Stock, or approximately 7.9% of the
outstanding shares of Common Stock. In July, 1996, RBB acquired
from the Company 5,500 shares of Series 3 Preferred, and prior to
the date of this Prospectus converted 1,500 shares of such Series
3 Preferred into Common Stock pursuant to the terms thereto. As of
the date of this Prospectus, RBB Bank owns 4,000 shares of the
Company's Series 3 Preferred, which are convertible into
approximately 2,672,024 shares of Common Stock assuming an average
bid quotation of the Common Stock five trading days immediately
preceding each conversion date equals or exceeds $2.00 per share,
which numbers could increase under certain limited circumstances.
The conversion price of the Series 3 Preferred is based on the
product of the average of the closing bid quotation of the Common
Stock for the five trading days immediately preceding the
conversion date multiplied by 75%. The initial conversion price
had a minimum of $0.75 per share and a maximum of $1.50 per share.
The minimum conversion price is reduced by $0.25 per share each
time the Company sustains a net loss, on a consolidated basis, in
each of two consecutive quarters; provided, however, that for the
purposes of determining whether the Company has sustained a net
loss in each of two consecutive quarters under the Series 3
Preferred, at no time will a quarter that has already been
considered in such determination be considered in any subsequent
determination. As a result of the net losses sustained by the
Company for the first and second quarters of 1997, the minimum
conversion price relating to the Series 3 Preferred has been
reduced to $0.50 per share. The Common Stock issuable upon
conversion of the Series 3 Preferred and the shares of Common Stock
issuable upon exercise of the 1996 RBB Warrants are covered by an
effective registration statement. See "Selling Shareholders."
RBB Bank has the right to acquire an aggregate of
approximately 8,657,585 shares of Common Stock, consisting of (i)
2,672,024 shares upon conversion of the issued and outstanding
Series 3 Preferred assuming the average closing bid quotation for
the Common Stock for five trading days immediately preceding each
of the conversion date or dates equals or exceeds $2.00 per share,
(ii) 1,379,311 shares upon conversion of the issued and outstanding
Series 8 Preferred assuming the Conversion Price Adjustment is not
in effect, or if in effect, assuming the average closing bid
quotation for the Common Stock for the five trading days
immediately preceding each conversion date equals or exceeds $2.27
per share, (iii) 1,600,000 shares of Common Stock upon the
conversion of the Series 10 Preferred assuming the average closing
bid quotation for the Common Stock five trading days immediately
preceding each conversion date equals or exceeds $2.34 per share,
and (iv) 3,006,250 shares upon the exercise of the 1996 RBB
Warrants, Series 6 Warrants and Series 10 Warrants. The foregoing
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estimates do not include the shares of Common Stock which may be
issued in payment of dividends accrued on the Series 3 Preferred,
Series 8 Preferred and the Series 10 Preferred. Upon such
conversion and exercise, RBB Bank will own approximately 46.1% of
the outstanding shares of Common Stock of the Company, which
includes the 970,885 shares of Common Stock held of record by RBB
Bank as of the date of this Prospectus but does not include the
shares of Common Stock which may be issuable for payment of
dividends on the Series 3 Preferred, Series 8 Preferred and Series
10 Preferred.
If the entire 1,600,000 shares of Common Stock reserved for
potential issuance upon conversion of the Series 10 Preferred were
issued to RBB Bank, and if the respective minimum conversion prices
for the Series 3 Preferred and Series 8 Preferred as of the date of
this Prospectus are applicable and RBB Bank acquires 8,000,000
shares of Common Stock upon conversion of the Series 3 Preferred
and 3,333,333 shares upon conversion of the Series 8 Preferred and
exercises all of the 1996 RBB Warrants, Series 6 Warrants and
Series 10 Warrants, RBB Bank would own 16,910,468 shares of Common
Stock, representing approximately 60.0% of the then outstanding
shares of Common Stock of the Company. In either case, RBB Bank
would be the largest single shareholder of the Company, and the
Company may not be able to avoid an actual change in control of the
Company if RBB Bank seeks such a change in control. Moreover, if
such conversion and exercise results in RBB Bank acquiring more
than 50% of the then outstanding Common Stock of the Company, the
Company would not be able to avoid a change in control. The
foregoing estimates as to the percentage of Common Stock that RBB
Bank would own assume that the Series 9 Preferred is not converted,
no other shares of Common Stock are issued by the Company (other
than in connection with the conversion of the outstanding shares of
Series 3 Preferred, Series 8 Preferred and Series 10 Preferred), no
other warrants or options are exercised (other than the 1996 RBB
Warrants, Series 6 Warrants and Series 10 Warrants), the Company
does not acquire additional shares of Common Stock as treasury
stock, and RBB Bank does not dispose of any shares of Common Stock.
See "--Private Placements and Exchange Agreements." See "Risk
Factors--Voting Control; Ability to Direct Management."
Infinity Private Placement
On July 14, 1997, the Company issued to Infinity 350 shares of
newly-created Series 5 Class E Convertible Preferred Stock, par
value $.001 per share (the "Series 5 Preferred") at a price of
$1,000 per share, for an aggregate sales price of $350,000. The
sale to Infinity was made in a private placement (the "Infinity
Private Placement") under Rule 506 of Regulation D under the
Securities Act, pursuant to the terms of a Subscription and
Purchase Agreement, dated July 7, 1997, between the Company and
Infinity ("Infinity Subscription"). The Company received proceeds
of $350,000 under the Infinity Private Placement, excluding the
payment of legal fees and miscellaneous costs. The Company has
used the net proceeds from the Infinity Private Placement to reduce
the outstanding balance under its then current revolving credit
facility.
First Infinity Exchange Agreement
Effective September 16, 1997, the Company entered into an
Exchange Agreement, dated October 31, 1997, but effective as of
September 16, 1997 (the "First Infinity Exchange Agreement"), with
Infinity pursuant to which the 350 shares of Series 5 Preferred
were tendered to the Company in exchange for (i) 350 shares of
Series 7 Preferred and (ii) two warrants to purchase up to an
aggregate of 35,000 shares of Common Stock issuable upon the
exercise of two warrants, each dated as of September 16, 1997,
issued by the Company to Infinity in connection with the First
Infinity Exchange Agreement, and exercisable for three years at
$1.8125 (the "Infinity Warrants"), pursuant to an exemption from
registration under Section 4(2) of the Securities Act. The
Infinity Warrants may be exercised at any time after December 31,
1997, and until July 7, 2000. The Company paid to Infinity the
dividends on the Series 5 Preferred which accrued from the date of
issuance until September 16, 1997, the effective date of the First
Infinity Exchange Agreement, by issuing to Infinity 1,461 shares of
Common Stock pursuant to the terms of the Series 5 Preferred, which
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shares of Common Stock are covered by this Prospectus. The rights
of the Series 7 Preferred are the same as the rights under the
Series 5 Preferred, except for certain conversion rights.
The conversion price of the Series 7 Preferred is $1.8125 per
share of Common Stock, except that, in the event the average
closing bid price of the Common Stock for 20 of any 30 consecutive
trading days (a "30 Day Period") after March 1, 1998, shall be less
than $2.50 as reported on the over-the-counter market, or the
closing sale price if listed on a national securities exchange and
if the holders of the Series 7 Preferred have engaged in no sales
of Common Stock of the Company during, and for 30 trading days
prior to, the applicable 30 Day Period, the conversion price shall
thereafter be the lesser of (i) the average closing bid quotation
of the Common Stock as reported on the over-the-counter market, or
the closing sale price if listed on a national securities exchange,
for the five trading days immediately preceding the date of the
conversion notice, provided by the holder to the Company multiplied
by 80% or (ii) $1.8125. Notwithstanding the foregoing, the
conversion price shall not be less than a minimum of $.75 per
share, which minimum shall be eliminated from and after September
6, 1998. Subject to the closing bid price of the Company's Common
Stock at the time of conversion and the other conditions which
could increase the number of shares to be issued upon conversion,
the Series 7 Preferred, if all were converted, could be converted
into between approximately 200,000 and 467,000 shares of Common
Stock, or more after the minimum conversion price is eliminated, or
under certain other limited circumstances.
Under the terms of the Infinity Warrants, if the Company
declares or pays, without consideration, any dividend on the Common
Stock payable in Common Stock, or effects a subdivision of the
outstanding shares of Common Stock into a greater number of shares
of Common Stock (by stock split, reclassification or otherwise than
by payment of a dividend in Common Stock or in any right to acquire
Common Stock), or if the outstanding shares of Common Stock are
combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the number of shares
of Common Stock issuable upon the exercise of such warrant or the
exercise price of such warrant will be adjusted appropriately. As
a result of such adjustment, the proportionate number of shares of
Common Stock issuable immediately prior to the happening of such
event will be the number of shares of Common Stock issuable
subsequent to the happening of such event. If at any time the
shares of Common Stock covered by the Infinity Warrants are covered
by an effective registration statement and the average closing bid
price of the Common Stock for ten consecutive trading days is in
excess of $7.00, then the Company will have the option to redeem
the Infinity Warrants for $0.01 per share of Common Stock covered
by the Infinity Warrants. The holder of the Infinity Warrants will
have the option to exercise the Infinity Warrants prior to
redemption by the Company. Under the terms of the Infinity
Warrants, the Common Stock issuable upon exercise of the Infinity
Warrants is subject to certain registration rights.
The Infinity Warrants are entitled to certain rights upon any
consolidation or merger of the Company in which the Company is not
the surviving entity, or in case of any sale or conveyance by the
Company to another entity of all or substantially all of the
property of the Company as an entirety or substantially as an
entirety. Upon any such event, the holder of the Infinity Warrants
will have the right, upon exercise of such warrant, to receive the
kind and amount of securities, cash or other property which the
holder of the Infinity Warrants would have owned or been entitled
to receive immediately after such consolidation, merger, sale or
conveyance had such warrant been exercised in full immediately
prior to the effective date of such consolidation, merger, sale or
conveyance.
Second Infinity Exchange Agreement
Pursuant to the Exchange Agreement, dated April 30, 1998, but
to be considered effective as of February 28, 1998 (the "Second
Infinity Exchange Agreement"), the Company and Infinity exchanged
the 350 shares of Series 7 Preferred for 350 shares of Series 9
Preferred, pursuant to exemption from registration under Sections
3(a)(9) and/or 4(2) of the Securities Act. Except for the exchange
of Series 7 Preferred for the Series 9 Preferred and termination of
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any and all rights Infinity may have under the Series 7 Preferred,
the Second Infinity Exchange Agreement does not terminate the First
Infinity Exchange Agreement. In addition, the Infinity Warrants
were not affected by the Second Infinity Exchange Agreement. The
Company has paid to Infinity the dividends on the Series 7
Preferred which accrued from the date of issuance through February
28, 1998, the effective date of the Second Infinity Exchange
Agreement, by issuing to Infinity 1,071 shares of Common Stock in
payment of such accrued dividends, which Common Stock is included
in this Prospectus.
The rights of the Series 9 Preferred are the same as the
rights under the Series 7 Preferred, except for the conversion
price. The Series 9 Preferred is convertible at a conversion price
of $1.8125 per share, except that, in the event the average closing
bid price of the Common Stock as reported in the over-the-counter
market, or the closing sale price if listed on a national
securities exchange, for the five (5) trading days prior to a
particular date of conversion, shall be less than $2.50, the
conversion price for only such particular conversion shall be the
average of the closing bid quotations of the Common Stock as
reported on the over-the-counter market, or the closing sale price
if listed on a national securities exchange for the five (5)
trading days immediately preceding the date of such particular
conversion notice provided by the holder to the Company multiplied
by 80%. Notwithstanding the foregoing, the conversion price shall
not be less than a minimum of $.75 per share, which minimum shall
be eliminated from and after September 6, 1998. See "--First
Infinity Exchange Agreement."
The Series 9 Preferred is not entitled to any voting rights,
except as required by law. The Series 9 Preferred has a
liquidation preference over the Common Stock equal to $1,000
consideration per outstanding share of Series 9 Preferred (the
"Series 9 Liquidation Value"), plus an amount equal to all unpaid
dividends accrued thereon. The Series 9 Preferred accrues
dividends on a cumulative basis at a rate of 4% per annum of the
Liquidation Value ("Series 9 Dividend Rate"), and is payable semi-
annually when and as declared by the Board of Directors. No
dividends or other distributions may be paid or declared or set
aside for payment on the Common Stock until all accrued and unpaid
dividends on all outstanding shares of Series 9 Preferred have been
paid or set aside for payment. Dividends may be paid, at the
option of the Company, in the form of cash or Common Stock of the
Company. If the Company pays dividends in Common Stock, such is
payable in the number of shares of Common Stock equal to the
product of (a) the quotient of (i) the Series 9 Dividend Rate
divided by (ii) the average of the closing bid quotation of the
Common Stock as reported on the NASDAQ for the five trading days
immediate prior to the date the dividend is declared, multiplied
by (b) a fraction, the numerator of which is the number of days
elapsed during the period for which the dividend is to be paid and
the denominator of which is 365.
The Company will have the option to redeem the shares of
Series 9 Preferred (a) between July 7, 1998, and July 7, 2001, at
a redemption price of $1,300 per share if at any time the average
closing bid price of the Common Stock for ten consecutive trading
days is in excess of $4.00, and (b) after July 7, 2001, at a
redemption price of $1,000 per share. The holder of the Series 9
Preferred will have the option to convert the Series 9 Preferred
prior to redemption by the Company. The Common Stock issuable on
the conversion of the Series 9 Preferred is subject to certain
registration rights pursuant to the Infinity Exchange Agreement.
See "Summary of Securities Being Offered."
If the Company at any time or from time to time while shares
of Series 9 Preferred are issued and outstanding declares or pays,
without consideration, any dividend on the Common Stock payable in
Common Stock, or effects a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
stock split, reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire Common Stock),
or if the outstanding shares of Common Stock are combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, then the conversion price in
effect immediately before such event will, concurrently with the
effectiveness of such event, be proportionately decreased or
increased, as appropriate. If the Company declares or pays,
without consideration, any dividend on the Common Stock payable in
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any right to acquire Common Stock for no consideration, then the
Company will be deemed to have made a dividend payable in Common
Stock in an amount of shares equal to the maximum number of shares
issuable upon exercise of such rights to acquire Common Stock.
RECENT DEVELOPMENTS
The following are all material changes in the Company's
affairs which have occurred since the end of December 31, 1997, and
which have not been described in the Company's reports on Form 10-K
for year ended December 31, 1997, or in Forms 10-Q or Forms 8-K
filed under the Exchange Act since the end of 1997 or otherwise
discussed in other sections of this Prospectus:
Oak Ridge System Contract Award
The Company and East Tennessee Materials and Energy Corp.
("M&EC") entered into a teaming agreement ("M&EC Contract")
pursuant to which the Company and M&EC agreed to act as a team in
the performance of certain contracts that either the Company or
M&EC may obtain from customers of the U.S. Department of Energy
("DOE") regarding treatment and disposal of certain types of
radioactive, hazardous or mixed waste (waste containing both
hazardous and low level radioactive waste) at DOE facilities. In
connection with proposals relating to the treatment and disposal of
organic contaminated mixed waste at DOE's Oak Ridge, Tennessee
system ("Oak Ridge"), M&EC and the Company made a joint proposal to
DOE, with M&EC to act as the team leader. In August 1998 M&EC, as
the team leader, was awarded three contracts ("Oak Ridge
Contracts") by Bechtel Jacobs Company, LLC, the government-
appointed manager of the environmental program for Oak Ridge, to
perform certain treatment and disposal services relating to Oak
Ridge. The Oak Ridge Contracts were issued by DOE based on
proposals by M&EC and the Company. The Company anticipates that,
as a member of the team with M&EC in connection with the Oak Ridge
Contracts and finalization of the scope of work documents with M&EC
relating to the work to be performed by each of the Company and
M&EC under the Oak Ridge Contracts, it will (i) provide certain of
the Company's environmental remediation technologies, (ii) install
equipment necessary to apply the Company's technology, and (iii)
supervise certain aspects of the remediation process operations.
There are no assurances that the Company and M&EC will complete the
scope of work documents. The Company also anticipates that a
substantial portion of any work performed under the Oak Ridge
Contracts will be performed at M&EC's facility at Oak Ridge
currently under development as of the date of this Prospectus. The
DOE estimates that the Oak Ridge Contracts have the potential to
generate up to $100 million in gross revenues over an estimated
time span of more than five years. As of the date of this
Prospectus, however, the Company cannot estimate (i) the amount of
work or revenues, if any, which will be received by M&EC under the
Oak Ridge Contracts, (ii) the percentage or amount of work received
by M&EC under the Oak Ridge Contracts which will be performed by
the Company, or (iii) the ultimate profitability, or lack of
profitability, of the Oak Ridge Contracts for the Company. See
"Special Note Regarding Forward Looking Statements."
USE OF PROCEEDS
The Company will not receive any part of the proceeds of the
sale of Shares. The Company will receive approximately $10,329,531
if the Selling Shareholders exercise all of the warrants covering
Shares included in this Prospectus. See "Plan Of Distribution."
Any proceeds received by the Company from the exercise of such
warrants, less the Company's share of the estimated expenses of the
cost of this offering, will be used by the Company for general
corporate purposes.
- 30 -
<PAGE>
The Company has agreed to pay all costs and fees relating to
the registration of the Common Stock covered by this Prospectus,
except for any discounts, concessions or commissions payable to
underwriters, dealers or agents incident to the offering of the
Shares covered by this Prospectus or any legal fees incurred by any
Selling Shareholders relating to this offering.
YEAR 2000 ISSUES
The staff of the Commission has indicated that each public
company should discuss its "Year 2000" issues. The Year 2000
problem arises because many computer systems were designed to
identify a year using only two digits, instead of four digits, in
order to conserve memory and other resources. For instance, "1997"
would be held in the memory of a computer as "97."
When the year changes from 1999 to 2000, a two digit system
would read the year as changing from "99" to "00." For a variety
of reasons, many computer systems are not designed to make such a
date change or are not designed to "understand" or react
appropriately to such a date change. Therefore, as the date
changes to the year 2000, many computer systems could completely
stop working or could perform in an improper and unpredictable
manner.
The Company has conducted a review of its computer systems to
identify the systems which it anticipated could be affected by the
Year 2000 issue, and the Company believes that all such systems
were already, or have been converted to be, Year 2000 compliant.
Such conversion, when required, did not entail material
expenditures by the Company. Pursuant to the Company's Year 2000
planning, the Company has requested information regarding the
computer systems of its key suppliers, customers, creditors, and
financial service organizations and has been informed that they are
substantially Year 2000 compliant. There can be no assurance,
however, that such key organizations are actually Year 2000
compliant and that the Year 2000 issue will not adversely affect
the Company's financial position or results of operations. The
Company believes that its expenditures in addressing its Year 2000
issues will not have a material adverse effect on the Company's
financial position or results of operations.
SUMMARY OF SECURITIES BEING OFFERED
The 9,227,074 Shares covered by this Prospectus are comprised
of the following: (a) 1,379,311 shares of Common Stock issuable by
the Company upon the conversion of 2,500 shares of Series 8
Preferred; (b) 2,200,000 shares of Common Stock issuable by the
Company upon the conversion of 3,000 shares of Series 10 Preferred
and in payment of dividends on the Series 10 Preferred (of which
1,600,000 will be issued upon conversion assuming the average
closing bid quotation for the Common Stock five trading days
immediately preceding each conversion date equals or exceeds $2.34
per share); (c) 250,000 shares of Common Stock which have been or
may be issued by the Company to RBB Bank in payment of dividends
accrued on the Series 4 Preferred (which was exchanged for the
Series 6 Preferred), Series 6 Preferred (which was exchanged for
the Series 8 Preferred) and the Series 8 Preferred; (d) 656,250
shares of Common Stock issuable upon the exercise of the Series 6
Warrants, exercisable for three years at an exercise price of
$1.8125 per share as to 375,000 shares of Common Stock and $2.125
per share as to 281,250 shares of Common Stock; (e) 350,000 shares
of Common Stock issuable upon the exercise of the Series 10
Warrants exercisable for three years at an exercise price of $2.50
per share as to 150,000 shares of Common Stock and $1.875 per share
as to 200,000 shares of Common Stock; (f) 300,000 shares of Common
Stock issuable by the Company upon the exercise of the Series 4
Genesis Warrants, 100,000 of which are exercisable for three years
at $1.50 per share and 200,000 of which are exercisable for five
years at $2.00 per share; (g) 1,875,000 shares of Common Stock
issuable by the Company upon the exercise of the Liviakis Warrant,
exercisable for four years at $1.875 per share; (h) 625,000 shares
of Common Stock issuable by the Company upon the exercise of the
- 31 -
<PAGE>
Prag Warrant, exercisable for four years at $1.875 per share; (i)
150,000 shares of Common Stock issuable by the Company upon the
exercise of the Series 10 Genesis Warrant, exercisable for three
years at $1.875 per share; (j) 350,000 shares of Common Stock
issuable by the Company upon the exercise of the Fontenoy Warrant,
exercisable for three years at $1.875 per share; (k) 200,000 shares
of Common Stock issuable by the Company upon the conversion of 350
shares of Series 9 Preferred, (l) 36,000 shares of Common Stock
which have been or may be issued by the Company to Infinity in
payment of dividends accrued on the Series 5 Preferred (which was
exchanged for the Series 7 Preferred), Series 7 Preferred (which
was exchanged for the Series 9 Preferred), and Series 9 Preferred;
(m) 35,000 shares of Common Stock issuable upon the exercise of the
Infinity Warrants issued by the Company to Infinity in connection
with the Infinity Exchange Agreement, exercisable for three years
at an exercise price of $1.8125 per share; (n) 125,000 shares of
Common Stock issuable by the Company upon the exercise of a
warrant, dated June 17, 1994, issued by the Company to Sun Bank,
National Association ("Sun Bank") in connection with the extension
of certain financial credits by Sun Bank to the Company ("Sun Bank
Warrant"), exercisable until June 16, 1999, at an exercise price of
$3.625 per share; (o) 75,000 shares of Common Stock issuable by the
Company upon exercise of the following warrants: (v) 7,000 shares
of Common Stock issuable upon the exercise of ("Blair Remainder
Warrant"), exercisable until December 31, 1999, at an exercise
price of $2.375 per share, issued to D.H. Blair Investment Banking
Corporation ("Blair") to reflect the unassigned portion of a
warrant for 75,000 shares of Common Stock which was previously
issued by the Company to Blair in connection with the extension of
a promissory note ("Blair Warrant") and which was partially
assigned by Blair to the following officers and directors of Blair:
(w) 28,000 shares of Common Stock issuable by the Company upon
exercise of one warrant issued to J. Morton Davis ("Davis") as a
result of the assignment by Blair of a portion of the Blair
Warrant, exercisable until December 31, 1999, at an exercise price
of $2.375 per share ("Davis Warrant"); (x) 28,000 shares of Common
Stock issuable by the Company upon exercise of one warrant issued
to Esther Stahler ("Stahler") as a result of the assignment by
Blair of a portion of the Blair Warrant, exercisable until December
31, 1999, at an exercise price of $2.375 per share ("Stahler
Warrant"); (y) 7,000 shares of Common Stock issuable by the Company
upon exercise of one warrant issued to Ruki Renov ("Renov") as a
result of the assignment by Blair of a portion of the Blair
Warrant, exercisable until December 31, 1999, at an exercise price
of $2.375 per share ("Renov Warrant"); and (z) 5,000 shares of
Common Stock issuable by the Company upon exercise of one warrant
issued to Martin A. Bell ("Bell") as a result of the assignment by
Blair of a portion of the Blair Warrant, exercisable until December
31, 1999, at an exercise price of $2.375 per share ("Bell
Warrant"); (p) 20,513 shares of Common Stock issuable by the
Company upon exercise of a warrant issued to Ally Capital
Management, Inc. ("Ally") in connection with a loan to the Company,
which warrant is exercisable until September 11, 2000, at an
exercise price of $2.4375 per share; (q) 100,000 shares of Common
Stock issuable by the Company upon the exercise of the Dionysus
Warrant issued by the Company to Dionysus in connection with the
RBB Series 4 Private Placement and exercisable for three years at
an exercise price of $1.70 per share; and (r) 500,000 shares of
Common Stock issuable upon the exercise of the following Service
Warrants, each dated July 23, 1997: (x) 175,000 shares of Common
Stock issuable at an exercise price of $2.00 per share and 175,000
shares of Common Stock issuable at an exercise price of $3.00 per
share under the Ehlert Warrants and (y) 75,000 shares of Common
Stock issuable at an exercise price of $2.00 per share and 75,000
shares of Common Stock issuable at an exercise price of $2.50 per
share under the Fetter Warrants. See "Private Placements and
Exchange Agreements."
The shares of Series 8 Preferred and Series 9 Preferred may be
converted into shares of Common Stock at a conversion price
("Conversion Price") equal to $1.8125 per share of Common Stock,
except that, in the event the average closing bid price of the
Common Stock as reported in the over-the-counter market, or the
closing sale price if listed on a national securities exchange, for
the five (5) trading days prior to a particular date of
conversion, shall be less than $2.265, the conversion price for
only such particular conversion shall be adjusted ("Conversion
Price Adjustment") to be the average of the closing bid quotations
of the Common Stock as reported on the over-the-counter market, or
the closing sale price if listed on a national securities exchange
for the five (5) trading days immediately preceding the date of
such particular conversion notice provided by the holder to the
Company multiplied by 80%. Notwithstanding the foregoing, the
conversion price shall not be less than a minimum of $.75 per
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<PAGE>
share, which minimum shall be eliminated from and after
September 6, 1998. See "Private Placements and Exchange Agreements."
If the Conversion Price Adjustment does not become effective
for any conversion of the Series 8 Preferred or Series 9 Preferred,
the conversion of all of the Series 8 Preferred could result in the
issuance of up to approximately 1,379,311 shares of Common Stock,
and the conversion of all of the Series 9 Preferred could result in
the issuance of up to approximately 200,000 shares of Common Stock.
If the Conversion Price Adjustment is in effect for all conversions
of Series 8 Preferred and Series 9 Preferred and the conversion
occurs prior to September 6, 1998, the number of shares of Common
Stock issuable upon the conversion of the Series 8 Preferred could
result in the issuance of between approximately 1,379,311 to
3,333,333 shares of Common Stock, and the conversion of the Series
9 Preferred could result in the issuance of between approximately
200,000 to 467,000 shares of Common Stock with the actual number
depending upon the closing bid price of the Common Stock over the
five (5) trading days immediately preceding the conversion date or
dates. The number of shares of Common Stock issuable upon
conversion of the Series 8 Preferred and the Series 9 Preferred
could exceed the foregoing estimates if converted after the minimum
conversion price is eliminated on September 6, 1998, or under
certain other limited circumstances. However, the Company is
required to use reasonable efforts to register only 1,379,311
shares to be issued upon the conversion of the Series 8 Preferred
under the terms of the Second RBB Exchange Agreement and 200,000
shares to be issued upon the conversion of the Series 9 Preferred
under the terms of the Second Infinity Exchange Agreement. The
1,379,311 shares and 200,000 shares required to be registered under
the terms of the First RBB Exchange Agreement and the First
Infinity Exchange Agreement, respectively, approximates the number
of shares of Common Stock issuable by the Company upon such
conversion at a conversion price of $1.8125 per share. See
"Private Placements and Exchange Agreements."
The holder of the Series 10 Preferred may convert into Common
Stock any or all of the Series 10 Preferred on and after 180 days
after June 30, 1998. The Series 10 Conversion Price is $1.875;
except that if the average of the closing bid price per share of
Common Stock quoted on the NASDAQ (or the closing bid price of the
Common Stock as quoted on the national securities exchange if the
Common Stock is not listed for trading on the NASDAQ but is listed
for trading on a national securities exchange) for the five (5)
trading days immediately prior to the particular Series 10
Conversion Date is less than $2.34, then the Series 10 Conversion
Price for that particular conversion shall be eighty percent (80%)
of the average of the closing bid price of the Common Stock on the
NASDAQ (or if the Common Stock is not listed for trading on the
NASDAQ but is listed for trading on a national securities exchange
then eighty percent (80%) of the average of the closing bid price
of the Common Stock on the national securities exchange) for the
five (5) trading days immediately prior to the particular Series 10
Conversion Date. As of June 30, 1998, the closing price of Common
Stock on the NASDAQ was $1.875 per share. See "Private Placements
and Exchange Agreements."
The number of shares of Common Stock issuable upon conversion
of the Series 10 Preferred could exceed the foregoing estimates
depending upon the closing bid price of the Common Stock at the
time or times of conversion or under certain other limited
circumstances. However, under the terms of the Series 10
Subscription, the Company is required to use reasonable efforts to
register only 2,200,000 shares to be issued upon the conversion of
the Series 10 Preferred and in payment of dividends accrued on the
Series 10 Preferred.
The Sun Bank Warrant was issued to Sun Bank under the terms of
a Loan Agreement, dated June 17, 1994, between the Company and Sun
Bank (the "Loan Agreement"). The Loan Agreement provided for the
extension of approximately $3.4 million of financial credits by Sun
Bank to the Company. Under the terms of the Sun Bank Warrant, if
the Company declares or pays, without consideration, any dividend
on the Common Stock payable in Common Stock, or effects a
subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by subdivision or
reclassification) or if the outstanding shares of Common Stock are
- 33 -
<PAGE>
combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the number of shares
of Common Stock issuable upon the exercise of the Sun Bank Warrant
or the exercise price of such warrant will be adjusted
appropriately. The initial exercise price of the Sun Bank Warrant
was $3.625 per share.
The Sun Bank Warrant is entitled to certain rights upon any
consolidation or merger of the Company in which the Company is not
the surviving entity, or in case of any sale or conveyance by the
Company to another entity of all or substantially all of the
property of the Company as an entirety or substantially as an
entirety. Upon such event, the holder of the Sun Bank Warrant will
have the right, upon exercise of such warrants, to receive the kind
and amount of securities, cash or other property which the holder
of the Sun Bank Warrant would have owned or been entitled to
receive immediately after such consolidation, merger, sale or
conveyance had such warrants been exercised in full immediately
prior to the effective date of such consolidation, merger, sale or
conveyance. Under the terms of the Sun Bank Warrant, the shares of
Common Stock issuable upon exercise of the Sun Bank Warrant are
entitled to certain registration rights.
Under the terms of the Service Warrants, the Dionysus Warrant,
the Blair Remainder Warrant, the Davis Warrant, the Stahler
Warrant, the Renov Warrant, the Bell Warrant, the Ally Warrant, the
Series 10 Genesis Warrant, and the Fontenoy Warrant (collectively,
the "Affected Warrants") if at any time or from time to time after
the date of each Affected Warrant, the Company (a) pays a dividend
on its Common Stock in shares of Common Stock, (b) subdivides its
outstanding shares of Common Stock into a greater number of shares,
(c) combines its outstanding shares of Common Stock into a smaller
number of shares, or (d) issues by reclassification of its Common
Stock any shares of any other class of capital stock of the
Company, then the number of shares issuable upon exercise of the
Affected Warrant and the exercise price of the Affected Warrant in
effect immediately prior to such event will be adjusted so that the
holder will be entitled upon exercise of such Affected Warrant to
purchase, without additional consideration, the number of shares of
Common Stock or other capital stock of the Company which the holder
would have owned or been entitled to purchase immediately following
the happening of any of the events described in (a), (b) or (c)
above had such Affected Warrant been exercised and the holder
become the holder of record of the shares purchased pursuant to the
Affected Warrant immediately prior to the record date fixed for the
determination of stockholders entitled to receive such dividend or
distribution or the effective date of such subdivision, combination
or reclassification. In such event the exercise price will be
equal to the aggregate consideration which the holder would have
had to pay for such shares issued pursuant to the Affected Warrant
immediately prior to such event divided by the number of shares
issued pursuant to the Affected Warrant the holder is entitled to
receive immediately after such event. If as a result of an
adjustment made as described in this paragraph the holder of such
Affected Warrant thereafter surrendered for exercise becomes
entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and any other class of capital stock of
the Company, the Board of Directors (whose determination shall be
conclusive and shall be described in a written notice to all
holders of the Affected Warrants promptly after such adjustment)
will determine the allocation of the adjusted exercise price of the
Affected Warrant between or among shares of such classes of capital
stock or shares of Common Stock and such other class of capital
stock. See "Private Placements and Exchange Agreements."
The terms of the Affected Warrants provide that upon any
consolidation or merger to which the Company is a party, other than
a merger or consolidation in which the Company is the continuing or
surviving corporation, or in case of any sale or conveyance to
another entity of all or substantially all of the property of the
Company as an entirety or substantially as an entirety, the holder
of the Affected Warrant will have the right thereafter, upon
exercise of such warrant, to receive the kind and amount of
securities, cash or other property which the holder would have
owned or been entitled to receive immediately after such
consolidation, merger, sale or conveyance had such Affected Warrant
been exercised immediately prior to the effective date of such
consolidation, merger, sale or conveyance and in any such case, if
necessary, appropriate adjustment will be made in the application
thereafter with respect to the rights and interests of the holder
of such Affected Warrant to the end that the provisions of this
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<PAGE>
paragraph and the preceding paragraph thereafter will be
correspondingly applicable, as nearly as may reasonably be, to such
securities and other property.
If the Company distributes pro rata to all of the holders of
its then outstanding shares of Common Stock (a) securities, other
than shares of Common Stock or stock options, or (b) property,
other than cash, without payment therefor, then, and in each such
case, the holder of a Affected Warrant, upon its exercise, will be
entitled to receive the securities and property which such holder
would hold on the date of such exercise if, on the date of such
Affected Warrant, the holder had been the holder of record of the
number of shares of the Common Stock subscribed for upon such
exercise and, during the period from the date of such warrant to
and including the date of such exercise, had retained such shares
and the securities and properties receivable by the holder during
such period.
Under the terms of the Liviakis Warrant and the Prag Warrant,
(together, the "LFC Warrants") if the Company declares or pays,
without consideration, any dividend on the Common Stock payable in
Common Stock, or effects a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
stock split, reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire Common Stock),
or if the outstanding shares of Common Stock are combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, then the number of shares of
Common Stock issuable upon the exercise of such warrant or the
exercise price of such warrant will be adjusted appropriately. As
a result of such adjustment, the proportionate number of shares of
Common Stock issuable immediately prior to the happening of such
event will be the number of shares of Common Stock issuable
subsequent to the happening of such event. If at any time the
shares of Common Stock covered by the Liviakis Warrant or Prag
Warrant, as applicable, are covered by an effective registration
statement and the average closing bid price of the Common Stock for
ten consecutive trading days is in excess of $3.75 then the Company
will have the option to redeem the respective LFC Warrants for
$0.05 per share of Common Stock covered by the LFC Warrants. The
holder of the LFC Warrants will have the option to exercise the LFC
Warrants prior to redemption by the Company. Under the terms of
the LFC Warrants, the Common Stock issuable upon conversion of the
LFC Warrants is subject to certain registration rights.
The holder of the LFC Warrants is entitled to certain rights
upon any consolidation or merger of the Company in which the
Company is not the surviving entity, or in case of any sale or
conveyance by the Company to another entity of all or substantially
all of the property of the Company as an entirety or substantially
as an entirety. Upon any such event, the holder of the LFC
Warrants will have the right, upon exercise of such warrants, to
receive the kind and amount of securities, cash or other property
which the holder of the LFC Warrants would have owned or been
entitled to receive immediately after such consolidation, merger,
sale or conveyance had such warrants been exercised in full
immediately prior to the effective date of such consolidation,
merger, sale or conveyance.
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<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SELLING SHAREHOLDERS
The following table sets forth, (a) the name of each Selling
Shareholder, (b) the amount of shares beneficially owned by each
Selling Shareholder as of the date of this Prospectus, (c) the
number of shares of Common Stock under this Prospectus, (d) the
number of shares beneficially owned after the offering, assuming
that all shares of Common Stock being offered hereby are sold and
that such are outstanding, and (e) the percentage of Common Stock
beneficially owned after completion of the offering, assuming that
all shares of Common Stock being offered hereby are sold and that
such are outstanding.
Percentage
of
Common
Common Common Stock
Stock Stock Beneficially
Beneficially Common Beneficially Owned After
Owned Stock Owned After Completion
Prior to Being Completion of of
Selling Shareholder Offering(1) Offered Offering (2) Offering(2)
___________________ ___________ _________ ____________ __________
<S> <C> <C> <C> <C>
RBB Bank
Aktiengellschaft(3) 10,460,687(3) 4,835,561 5,625,126(3) 33.3%
JW Genesis Financial
Corp.(4) 562,500(4) 450,000 112,500 (19)
Sun Bank, National
Association(5) 125,000(5) 125,000 0 -
The Infinity Fund,
L. P.(6) 277,821(6) 271,000 6,821 (19)
Karl H. Ehlert(7) 602,000(7) 350,000 252,000 2.1%
R. Keith Fetter(8) 220,000(8) 150,000 70,000 (19)
Dionysus Limited(9) 315,000(9) 100,000 215,000 1.8%
Ally Capital
Management(10) 53,846(10) 20,513 33,333 (19)
D.H. Blair Investment
Banking Corp.(11) 434,476(11) 7,000 427,476 3.4%
J. Morton Davis(12) 626,251(12) 28,000 598,251 4.8%
Esther Stahler(13) 67,100(13) 28,000 39,100 (19)
Ruki Renov(14) 46,100(14) 7,000 39,100 (19)
Martin A. Bell(15) 13,000(15) 5,000 8,000 (19)
Liviakis Financial
Communications, Inc.(16) 1,875,000(16) 1,875,000 0 -
Robert B. Prag(17) 635,000(17) 625,000 10,000 (19)
Fontenoy Investments(18) 350,000(18) 350,000 0 -
______________________________
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<PAGE>
<FN>
(1) Includes shares of Common Stock which may be acquired upon (a)
the exercise of outstanding warrants, whether such are
currently exercisable and/or (b) conversion of outstanding
shares of preferred stock, whether or not such are currently
convertible.
(2) Assumes (a) all shares of Common Stock covered by this
Prospectus are sold, (b) the Selling Stockholder does not
acquire beneficial ownership of additional shares of Common
Stock after the date of this Prospectus, and (c) the Company
does not issue any additional shares of Common Stock after the
date of this Prospectus, except the shares of Common Stock
which a person has the right to acquire upon the exercise of
warrants and conversion of preferred stock outstanding as of
the date of this Prospectus, but are not determined to be
outstanding for the purpose of computing the percentage
ownership of any other person. The amounts indicated are
based on outstanding Common Stock of 12,228,937 shares as of
August 24, 1998.
(3) Includes (a) 3,006,250 shares that RBB Bank is entitled to
receive upon exercise of all of the 1996 RBB Warrants, Series
6 Warrants and Series 10 Warrants; (b) 2,672,024 shares that
RBB Bank is entitled to receive upon conversion of the 4,000
shares of Series 3 Preferred held by RBB Bank (assuming the
average closing bid quotation for the Common Stock for the
five trading days immediately preceding each conversion date
equals or exceeds $2.00 per share); (c) 1,379,311 shares that
RBB Bank is entitled to receive upon conversion of the 2,500
shares of Series 8 Preferred (assuming the Conversion Price
Adjustment is not in effect); (d) 2,200,000 shares of Common
Stock that the Company has reserved for issuances to RBB Bank
upon conversion of the 3,000 shares of Series 10 Preferred and
in payment of accrued dividends on the Series 10 Preferred (e)
34,666 shares of Common Stock that RBB Bank may receive in
payment of the accrued dividends on the Series 3 Preferred;
(f) 197,551 shares that RBB Bank may receive in payment of the
accrued dividends on the Series 4 Preferred (which has been
exchanged for the Series 6 Preferred), Series 6 Preferred
(which has been exchanged for the Series 8 Preferred), and
Series 8 Preferred, and (g) 970,885 shares held directly by
RBB Bank. The Company's Registration Statement on Form S-3,
No. 333-14513, effective October 21, 1996 (the "1996
Registration Statement") currently covers the reoffer and
resale of up to 6,030,000 of the 10,508,687 shares noted as
beneficially owned by RBB Bank. The shares of Common Stock
covered by the 1996 Registration Statement consist of
3,700,000 shares issuable upon conversion of the Series 3
Preferred held by RBB Bank, 2,000,000 shares issuable upon
exercise of the 1996 RBB Warrants, and 330,000 shares issuable
in payment of dividends accrued on the Series 3 Preferred.
(4) Includes (a) 112,500 shares that Genesis is entitled to
receive upon exercise of a warrant dated September 16, 1996
(the "1996 Genesis Warrant"), (b) 300,000 shares that Genesis
is entitled to receive upon exercise of the Series 4 Genesis
Warrants, and (c) 150,000 shares that Genesis is entitled to
receive upon exercise of the Series 10 Genesis Warrant. The
1996 Registration Statement (defined in footnote (3) to this
table) covers the reoffer and resale of the 112,000 shares
issuable upon exercise of the 1996 Genesis Warrant.
(5) Represents shares that Sun Bank is entitled to receive upon
exercise of the Sun Bank Warrant. Sun Bank currently provides
the Company with certain banking services and financial
credits.
(6) Includes (a) 200,000 shares that Infinity is entitled to
receive upon conversion of all of the Series 9 Preferred held
by Infinity (assuming the Conversion Price Adjustment is not
in effect), (b) 36,000 shares of Common Stock that Infinity
has received or may receive in payment of the accrued
dividends on the Series 7 Preferred (which was exchanged for
the Series 9 Preferred), and Series 9 Preferred, (c) 35,000
shares that are issuable upon exercise of the Infinity
Warrants, and (d) 6,821 shares of Common Stock directly held
by Infinity.
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<PAGE>
(7) Represents shares that Mr. Ehlert is entitled to receive upon
exercise of the Ehlert Warrants. Mr. Ehlert currently provides
investor relations, marketing, and consulting services to the
Company.
(8) Includes 150,000 shares that Mr. Fetter is entitled to receive
upon exercise of the Fetter Warrants. Mr. Fetter previously
provided investor relations, marketing, and consulting
services to the Company.
(9) Includes 100,000 shares that Dionysus is entitled to receive
upon exercise of the Dionysus Warrant.
(10) Includes 20,513 shares that Ally is entitled to receive upon
exercise of the Ally Warrant.
(11) Includes 7,000 shares that Blair is entitled to receive upon
exercise of the Blair Remainder Warrant issued to Blair to
reflect the unassigned portion of the Blair Warrant for 75,000
shares of Common Stock which was previously issued by the
Company to Blair in connection with the extension of a
promissory note. Effective March 23, 1995, the Blair Warrant
was partially assigned by Blair to the following officers and
directors of Blair: Davis, Stahler, Renov and Bell to purchase
28,000, 28,000, 7,000 and 5,000 shares thereunder,
respectively. See "Summary of Securities Being Offered."
Includes (i) 217,701 shares held by Blair, (ii) 200,000 shares
issuable upon exercise of one warrant, and (iii) 9,775 shares
issuable upon exercise of one warrant. The 1996 Registration
Statement currently covers the reoffer and resale of up to
200,000 shares issuable upon exercise of the warrant for
200,000 shares issued to Blair. All of the Common Stock held
by Blair may be considered to be beneficially owned by Davis,
the sole shareholder of Blair. See footnote 12 to this Table.
(12) Mr. Davis is an investment banker and sole shareholder of
Blair, a broker-dealer registered under the Exchange Act.
Includes (i) 28,000 shares that Davis is entitled to receive
upon exercise of the Davis Warrant; (ii) 9,775 shares that
Davis is entitled to receive upon exercise of a warrant; (iii)
154,000 shares owned by Davis' spouse; and (iv) 434,476 shares
held by Blair and described in footnote 11 to this Table. Mr.
Davis disclaims beneficial ownership over the shares held by
his spouse. The number of shares indicated does not include
563,793 shares which are beneficially owned by Steve Gorlin,
a director of the Company, and which are pledged to Davis and
Blair pursuant to a Pledge Agreement dated June, 1992.
Davis and Blair have filed a joint Schedule 13G, as amended
from time to time, regarding the Common Stock, which states
that Davis has sole voting and dispositive control over the
shares of Common Stock held by Blair. Davis is, therefore,
considered to be the beneficial owner of the Common Stock held
by Blair.
(13) Includes 28,000 shares that Stohler is entitled to receive
upon exercise of the Stohler Warrant.
(14) Includes 7,000 shares that Renov is entitled to receive upon
exercise of the Renov Warrant.
(15) Includes 5,000 shares that Bell is entitled to receive upon
exercise of the Bell Warrant.
(16) Represents shares that Liviakis is entitled to receive upon
exercise of the Liviakis Warrant. Liviakis currently provides
investor relations and consulting services to the Company
pursuant to the terms of a Consulting Agreement, dated June
30, 1998 between the Company and Liviakis ("Liviakis
Consulting Agreement").
(17) Includes 625,000 shares that Prag is entitled to receive upon
exercise of the Prag Warrant and 10,000 shares held directly
by Prag. Prag is an executive officer of Liviakis and
received the warrant in connection with his assistance in the
RBB Series 10 Private Placement. As an executive officer of
Liviakis, Prag currently provides investor relations and
consulting services to the Company under the terms of the
Liviakis Consulting Agreement. Does not include the 1,875,000
- 38 -
<PAGE>
shares Liviakis is entitled to acquire under the Liviakis
Warrant.
(18) Represents shares that Fontenoy is entitled to receive upon
exercise of the Fontenoy Warrant. Fontenoy currently provides
investor relations, marketing and consulting services to the
Company.
(19) Less than 1.0%.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be offered and sold from time to time by the
Selling Shareholders, or by pledges, donees, transferees or other
successors in interest. The Selling Shareholders will act
independently of the Company in making decisions with respect to
the timing, market, or otherwise at prices related to the then
current market price or in negotiated transactions. The Shares may
be sold by the Selling Shareholders in one or more transactions on
the NASDAQ and the BSE or otherwise at market prices then
prevailing or in privately negotiated transactions. The Shares may
be sold by one or more of the following: (i) ordinary brokerage
transactions and transactions in which the broker solicits
purchasers; (ii) purchases and resale by a broker-dealer for its
account pursuant to this Prospectus, and (iii) a block trade in
which the broker-dealer so engaged will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction. The Company has not been
advised by the Selling Shareholders that they have, as of the date
hereof, made any arrangements relating to the distribution of the
Shares covered by this Prospectus, except that certain of the
Selling Shareholders are broker-dealers. See "Selling
Shareholders." In effecting sales, broker-dealers engaged by the
Selling Shareholders may arrange for other broker-dealers to
participate, and, in such case, broker-dealers will receive
commissions or discounts from the Selling Shareholders in amounts
to be negotiated immediately prior to sale.
In offering the Shares, the Selling Shareholders and any
broker-dealers and any other participating broker-dealers who
execute sales for the Selling Shareholders may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales. Accordingly, any profits realized by
the Selling Shareholders and the compensation of such broker-dealer
may be deemed to be underwriting discounts and commissions. Any
Shares covered by this Prospectus which qualify for sale pursuant
to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
LEGAL OPINION
Certain legal matters in connection with the Common Stock
offered hereby will be passed upon for the Company by Conner &
Winters, A Professional Corporation, Oklahoma City, Oklahoma.
EXPERTS
The financial statements and schedules incorporated by
reference in this Prospectus and elsewhere in the Registration
Statement, to the extent and for the periods indicated in their
reports, have been audited by BDO Seidman LLP, independent public
accountants, and are included herein in reliance upon the authority
of said firm as experts in giving such reports.<PAGE>
- 39 -
<PAGE>
<PAGE>
No dealer, salesman or other
person has been authorized to
give any information not con-
tained in this Prospectus and,
if given or made, such informa-
tion or representations must
not be relied upon as having
been authorized by the Company
or the Standby Purchasers. This
Prospectus does not constitute 9,227,074 Shares
an offer to sell or a solicita-
tion of an offer to buy any of
the securities offered hereby
in any jurisdiction to any
person to whom it is unlawful
to make such offer in such juris-
diction. Neither the delivery Perma-Fix Environmental
of this Prospectus nor any sale Services, Inc.
hereunder shall under any circum-
stances create any implication
that there has been no change in
the affairs of the Company since
the date hereof.
_______________________
<TABLE>
<CAPTION>
Table of Contents Common Stock
Page
_____
<S> <C>
Available Information . . . . . 4
Incorporation by Reference. . . 4
_____________
Risk Factors. . . . . . . . . . 5
The Company . . . . . . . . . . 12 Prospectus
Private Placements and _____________
Exchange Agreements. . . . . . .20
Recent Developments. . . . . . .30
Use of Proceeds. . . . . . . . .30
Summary of Securities Being
Offered. . . . . . . . . . . . .31
Selling Shareholders . . . . . .36
Plan of Distribution . . . . . .39
Legal Opinion. . . . . . . . . .39 ______________, 1998
Experts. . . . . . . . . . . . .39
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<CAPTION>
Nature of Expense
_________________
<S> <C>
SEC Registration Fee . . . . . . . . . . . . .$ 4,961.37
Legal Fees (Including Blue Sky). . . . . . . .$ 40,000.00
Accounting Fees and Expenses . . . . . . . . .$ 5,000.00
Printing . . . . . . . . . . . . . . . . . . .$ 2,500.00
Miscellaneous. . . . . . . . . . . . . . . . .$ 2,500.00
___________
Total $ 54,961.37
===========
</TABLE>
The foregoing expenses, except for the registration fee, are
estimated pursuant to Item 511 of Regulation S-K.
Item 15. Indemnification of Officers and Directors
Section 145 of the Delaware Corporation Law provides that a
corporation has the power to indemnify a director, officer,
employee or agent of the corporation and certain other persons
serving at the request of the corporation in related capacities
against amounts paid and expenses incurred in connection with an
action or proceeding to which he is or is threatened to be made a
party by reason of such position, if such person shall have acted
in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, in any
criminal proceeding, if such person had no reasonable cause to
believe his conduct was unlawful; provided that, no indemnification
shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and
only to the extent that the adjudicating court determines that,
despite the adjudication of liability but in view of all the
circumstance of the case, such person is fairly and reasonably
entitled to indemnification.
Article EIGHTH of the Company's Restated Certificate of
Incorporation provides as follows with respect to the
indemnification of officers and directors of the Company:
All persons who the Corporation is empowered to indemnify
pursuant to the provisions of Section 145 of the General
Corporation Law of the State of Delaware (or any similar
provision or provisions of applicable law at the time in
effect), shall be indemnified by the Corporation to the
full extent permitted thereby. The foregoing right of
indemnification shall not be deemed to be exclusive of
any other rights to which those seeking indemnification
may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise.
No repeal or amendment of this Article EIGHTH shall
adversely affect any rights of any person pursuant to
this Article EIGHTH which existed at the time of such
repeal or amendment with respect to acts or omissions
occurring prior to such repeal or amendment.
The Company's Restated Certificate of Incorporation provides
that no director of the Company shall be personally liable to the
Company or its stockholders for any monetary damages for breaches
of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Company or its
stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii)
under Section 174 of the General Corporation Law of the State of
Delaware; or (iv) for any transaction from which the director
derived an improper personal benefit.
<PAGE>
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ----------
<S> <C>
4.1 Subscription and Purchase Agreement, dated June 9, 1997,
between the Company and RBB Bank Aktiengesellschaft as
incorporated by reference from Exhibit 4.1 to the Company's
Form 8-K, dated June 11, 1997.
4.2 Subscription and Purchase Agreement, dated July 7, 1997,
between the Company and the Infinity Fund, L.P. as
incorporated by reference from Exhibit 4.1 to the Company's
Form 8-K, dated July 7, 1997.
4.3 Exchange Agreement, dated November 6, 1997, to be considered
effective as of September 16, 1997, between the Company and
RBB Bank, as incorporated by reference from Exhibit 4.11 from
the Company's Report on Form 10-Q for the period ended
September 30, 1997.
4.4 Certificate of Designations of Series 6 Class F Convertible
Preferred Stock incorporated by reference from Exhibit 4.7 to
the Company's Report on Form 10-Q for the period ended
September 30, 1997.
4.5 Exchange Agreement dated as of October 31, 1997, to be
considered effective as of September 16, 1997, between the
Company and the Infinity Fund, L.P. as incorporated by
reference from Exhibit 4.12 to the Company's Report on Form
10-Q for the period ended September 30, 1997.
4.6 Certificate of Designations of Series 7 Class G Convertible
Preferred Stock.*
4.7 Exchange Agreement, dated April 30, 1998, to be considered
effective as of February 28, 1998, between the Company and RBB
Bank, as incorporated by reference from Exhibit 10.6 to the
Company's Report on Form 10-Q for the quarter ended June 30,
1998.
4.8 Certificate of Designations of Series 8 Class H Convertible
Preferred Stock as incorporated by reference from Exhibit 3(i)
to the Company's Report on Form 10-Q for the quarter ended
June 30, 1998.
4.9 Specimen copy of Series 8 Class H Convertible Preferred Stock
Certificate, as incorporated by reference from Exhibit 4.5 to
the Company's Report on Form 10-Q for the quarter ended
June 30, 1998.
4.10 Exchange Agreement dated as of April 30, 1998, to be
considered effective as of February 28, 1998, between the
Company and the Infinity Fund, L.P., as incorporated by
reference from Exhibit 10.7 to the Company's Report on Form
10-Q for the quarter ended June 30, 1998.
4.11 Certificate of Designations of Series 9 Class I Convertible
Preferred Stock, as incorporated by reference from Exhibit
3(i) to the Company's Report on Form 10-Q for the quarter
ended June 30, 1998.
4.12 Specimen copy of Series 9 Class I Convertible Preferred Stock
Certificate, as incorporated by reference from Exhibit 4.7 to
the Company's Report on Form 10-Q for the quarter ended
June 30, 1998.
4.13 Certificate of Elimination regarding the Series 6 Class F
Convertible Preferred Stock and the Series 7 Class G
Convertible Preferred Stock.
II-2
<PAGE>
4.14 Private Securities Subscription Agreement, dated June 30,
1998, between the Company and RBB Bank Aktiengesellschaft as
incorporated by reference from Exhibit 4.1 to the Company's
Form 8-K dated June 30, 1998.
4.15 Certificate of Designations of Series 10 Class J Convertible
Preferred Stock, dated July 16, 1998, as incorporated by
reference from Exhibit 3(i) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998.
4.16 Specimen copy of Certificate relating to the Series 10 Class
J Convertible Preferred Stock as incorporated by reference
from Exhibit 4.3 to the Company's Form 8-K, dated June 30,
1998.
5.1 Opinion of Conner & Winters, a Professional Corporation.**
23.1 Consent of BDO Seidman, LLP. **
23.2 Consent of Conner & Winters, as contained in Exhibit 5.1
hereto and incorporated herein by reference.**
24.1 Powers of Attorney.*
99.1 Common Stock Purchase Warrant ($1.8125) No. RBB 9-97-1, dated
September 16, 1997, between the Company and RBB Bank
Aktiengellschaft.*
99.2 Common Stock Purchase Warrant ($1.8125) No. RBB 9-97-2, dated
September 16, 1997, between the Company and RBB Bank
Aktiengellschaft.*
99.3 Common Stock Purchase Warrant ($2.125) No. RBB 9-97-3, dated
September 16, 1997, between the Company and RBB Bank
Aktiengellschaft.*
99.4 Common Stock Purchase Warrant No. INF 9-97-1, dated
September 16, 1997, between the Company and The Infinity Fund,
L.P.*
99.5 Common Stock Purchase Warrant No. INF 9-97-2, dated
September 16, 1997, between the Company and The Infinity Fund,
L.P.*
99.6 Common Stock Purchase Warrant ($1.50), dated June 9, 1997,
between the Company and JW Charles Financial Services, Inc.,
as incorporated by reference from Exhibit 4.6 to the Company's
Form 8-K, dated June 11, 1997.
99.7 Common Stock Purchase Warrant ($2.00), dated June 9, 1997,
between the Company and JW Charles Financial Services, Inc.,
as incorporated by reference from Exhibit 4.7 to the Company's
Form 8-K, dated June 11, 1997.
99.8 Warrant Agreement, dated June 17, 1994, between the Company
and Sun Bank, National Association, as incorporated by
reference from Exhibit 4.2 to the Company's Form 8-K, dated
June 17, 1994.
99.9 Common Stock Purchase Warrant ($2.00), dated July 25, 1997,
between the Company and Karl Ehlert.*
99.10 Common Stock Purchase Warrant ($3.00), dated July 25, 1997,
between the Company and Karl Ehlert.*
99.11 Common Stock Purchase Warrant ($2.00), dated July 25, 1997,
between the Company and Keith Fetter.*
II-3
<PAGE>
99.12 Common Stock Purchase Warrant ($2.50), dated July 25, 1997,
between the Company and Keith Fetter.*
99.13 Common Stock Purchase Warrant, dated effective as of
September 16, 1997, between the Company and Dionysus
Limited.*
99.14 Common Stock Purchase Warrant dated January, 1995, between
the Company and D. H. Blair Investment Banking Corp.*
99.15 Common Stock Purchase Warrant dated effective as of
March 23, 1995, between the Company and D. H. Blair
Investment Banking Corp.*
99.16 Common Stock Purchase Warrant dated effective as of
March 23, 1995, between the Company and J. Morton Davis.*
99.17 Common Stock Purchase Warrant dated effective as of
March 23, 1995, between the Company and Esther Stahler.*
99.18 Common Stock Purchase Warrant dated effective as of
March 23, 1995, between the Company and Martin Bell.*
99.19 Common Stock Purchase Warrant dated effective as of
March 23, 1995, between the Company and Ruki Renov.*
99.20 Common Stock Purchase Warrant dated September 11, 1995
between the Company and Ally Capital Management, Inc.*
99.21 Common Stock Purchase Warrant ($1.875) dated June 30, 1998,
between the Company and RBB Bank Aktiengesellschaft as
incorporated by reference from Exhibit 4.4 to the Company's
Form 8-K, dated June 30, 1998.
99.22 Common Stock Purchase Warrant ($2.50) dated June 30, 1998,
between the Company and RBB Bank Aktiengesellschaft as
incorporated by reference from Exhibit 4.5 to the Company's
Form 8-K, dated June 30, 1998.
99.23 Consulting Agreement dated effective June 30, 1998, between
the Company and Liviakis Financial Communications, Inc. as
incorporated by reference from Exhibit 4.6 to the Company's
Form 8-K, dated June 30, 1998.
99.24 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and Liviakis Financial Communications,
Inc. as incorporated by reference from Exhibit 4.7 to the
Company's Form 8-K, dated June 30, 1998.
99.25 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and Robert B. Prag as incorporated by
reference from Exhibit 4.8 to the Company's Form 8-K, dated
June 30, 1998.
99.26 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and JW Genesis Financial Corporation as
incorporated by reference from Exhibit 10.8 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
99.27 Common Stock Purchase Warrant effective June 30, 1998,
between the Company and Fontenoy Investments as
incorporated by reference from Exhibit 10.9 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
II-4
<PAGE>
99.28 Employment Agreement dated October 1, 1997, between the
Company and Dr. Louis F. Centofanti is incorporated by
reference from Exhibit 10.9 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended
September 30, 1997.
<FN>
*Previously filed
**Filed herein
</FN>
</TABLE>
__________________________
Item 17. Undertakings
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to the Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the
"Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of this
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 (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the Company pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
the Company's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at the 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 Company pursuant to the indemnification
provisions described herein, or otherwise, the Company has been
II-5
<PAGE>
advised that in the opinion of the 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 Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being
registered, the Company 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-6
<PAGE>
<PAGE>
SIGNATURES FOR FORM S-3
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 Gainesville, State of Florida, on the 31st day of August, 1998.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By: /s/ Louis F. Centofanti
________________________________
Dr. Louis F. Centofanti
Chairman, President and
Chief Executive Officer
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.
/s/ Dr. Louis F. Centofanti Chairman of the Board August 31, 1998
___________________________ of Directors, President,
and Chief Executive Officer
(Principal Executive Officer)
/s/ Richard T. Kelecy Chief Financial Officer August 31, 1998
__________________________ (Principal Financial and
Accounting Officer)
*
__________________________ Director August 31, 1998
Mark A. Zwecker
*
__________________________ Director August 31, 1998
Steve Gorlin
*
__________________________ Director August 31, 1998
Jon Colin
*By /s/ Dr. Louis F. Centofanti
___________________________ August 31, 1998
Dr. Louis F. Centofanti
Attorney In Fact
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
______________
Sequential
Exhibit No. Description Page No.
___________ _________________________________________ __________
<S> <C> <C>
4.1 Subscription and Purchase Agreement,
dated June 9, 1997, between the Company
and RBB Bank Aktiengesellschaft as
incorporated by reference from Exhibit
4.1 to the Company's Form 8-K, dated
June 11, 1997. *
4.2 Subscription and Purchase Agreement,
dated July 7, 1997, between the Company
and the Infinity Fund, L.P. as
incorporated by reference from Exhibit
4.1 to the Company's Form 8-K, dated
July 7, 1997. *
4.3 Exchange Agreement, dated November 6,
1997, to be considered effective as of
September 16, 1997, between the
Company and RBB Bank, as incorporated
by reference from Exhibit 4.11 from the
Company's Report on Form 10-Q for the
period ended September 30, 1997. *
4.4 Certificate of Designations of Series 6
Class F Convertible Preferred Stock
incorporated by reference from Exhibit
4.7 to the Company's Report on Form
10-Q for the period ended September 30,
1997. *
4.5 Exchange Agreement dated as of October 31,
1997, to be considered effective as of
September 16, 1997, between the Company
and the Infinity Fund, L.P. as
incorporated by reference from Exhibit
4.12 to the Company's Report on Form
10-Q for the period ended September 30,
1997. *
4.6 Certificate of Designations of Series 7
Class G Convertible Preferred Stock. *
<PAGE>
<PAGE>
4.7 Exchange Agreement, dated April 30, 1998,
to be considered effective as of February 28,
1998, between the Company and RBB
Bank, as incorporated by reference from
Exhibit 10.6 to the Company's Report on
Form 10-Q for the quarter ended June 30,
1998. *
4.8 Certificate of Designations of Series 8
Class H Convertible Preferred Stock as
incorporated by reference from Exhibit
3(i) to the Company's Report on Form
10-Q for the quarter ended June 30, 1998. *
4.9 Specimen copy of Series 8 Class H
Convertible Preferred Stock Certificate,
as incorporated by reference from Exhibit
4.5 to the Company's Report on Form 10-Q
for the quarter ended June 30, 1998. *
4.10 Exchange Agreement dated as of April 30,
1998, to be considered effective as of
February 28, 1998, between the Company
and the Infinity Fund, L.P., as incor-
porated by reference from Exhibit 10.7
to the Company's Report on Form 10-Q for
the quarter ended June 30, 1998. *
4.11 Certificate of Designations of Series 9
Class I Convertible Preferred Stock, as
incorporated by reference from Exhibit
3(i) to the Company's Report on Form
10-Q for the quarter ended June 30, 1998. *
4.12 Specimen copy of Series 9 Class I
Convertible Preferred Stock Certificate,
as incorporated by reference from Exhibit
4.7 to the Company's Report on Form 10-Q
for the quarter ended June 30, 1998. *
4.13 Certificate of Elimination regarding the
Series 6 Class F Convertible Preferred Stock
and the Series 7 Class G Convertible
Preferred Stock. *
4.14 Private Securities Subscription Agreement,
dated June 30, 1998, between the Company
and RBB Bank Aktiengesellschaft as incor-
porated by reference from Exhibit 4.1
to the Company's Form 8-K dated June 30,
1998. *
4.15 Certificate of Designations of Series 10
Class J Convertible Preferred Stock, dated
July 16, 1998, as incorporated by refer-
ence from Exhibit 3(i) to the Company's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998. *
4.16 Specimen copy of Certificate relating to
the Series 10 Class J Convertible Preferred
Stock as incorporated by reference from
Exhibit 4.3 to the Company's Form 8-K,
dated June 30, 1998. *
5.1 Opinion of Conner & Winters, a Professional
Corporation.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Conner & Winters, as contained
in Exhibit 5.1 hereto and incorporated
herein by reference.
24.1 Powers of Attorney. *
99.1 Common Stock Purchase Warrant ($1.8125)
No. RBB 9-97-1, dated September 16, 1997,
between the Company and RBB Bank
Aktiengellschaft. *
99.2 Common Stock Purchase Warrant ($1.8125)
No. RBB 9-97-2, dated September 16, 1997,
between the Company and RBB Bank
Aktiengellschaft. *
99.3 Common Stock Purchase Warrant ($2.125)
No. RBB 9-97-3, dated September 16, 1997,
between the Company and RBB Bank
Aktiengellschaft. *
99.4 Common Stock Purchase Warrant No. INF
9-97-1, dated September 16, 1997,
between the Company and The Infinity
Fund, L.P. *
99.5 Common Stock Purchase Warrant No. INF
9-97-2, dated September 16, 1997,
between the Company and The Infinity
Fund, L.P. *
99.6 Common Stock Purchase Warrant ($1.50),
dated June 9, 1997, between the Company
and JW Charles Financial Services,
Inc., as incorporated by reference from
Exhibit 4.6 to the Company's Form 8-K,
dated June 11, 1997. *
- 2 -
<PAGE>
99.7 Common Stock Purchase Warrant ($2.00),
dated June 9, 1997, between the Company
and JW Charles Financial Services,
Inc., as incorporated by reference from
Exhibit 4.7 to the Company's Form 8-K,
dated June 11, 1997. *
99.8 Warrant Agreement, dated June 17, 1994,
between the Company and Sun Bank,
National Association, as incorporated by
reference from Exhibit 4.2 to the Company's
Form 8-K, dated June 17, 1994. *
99.9 Common Stock Purchase Warrant ($2.00),
dated July 25, 1997, between the Company
and Karl Ehlert. *
99.10 Common Stock Purchase Warrant ($3.00),
dated July 25, 1997, between the Company
and Karl Ehlert. *
99.11 Common Stock Purchase Warrant ($2.00),
dated July 25, 1997, between the Company
and Keith Fetter. *
99.12 Common Stock Purchase Warrant ($2.50),
dated July 25, 1997, between the Company
and Keith Fetter. *
99.13 Common Stock Purchase Warrant, dated
effective as of September 16, 1997,
between the Company and Dionysus Limited. *
99.14 Common Stock Purchase Warrant dated January,
1995, between the Company and D. H. Blair
Investment Banking Corp. *
99.15 Common Stock Purchase Warrant dated effective
as of March 23, 1995, between the Company
and D. H. Blair Investment Banking Corp. *
99.16 Common Stock Purchase Warrant dated effective
as of March 23, 1995, between the Company
and J. Morton Davis. *
99.17 Common Stock Purchase Warrant dated effective
as of March 23, 1995, between the Company
and Esther Stahler. *
99.18 Common Stock Purchase Warrant dated effective
as of March 23, 1995, between the Company
and Martin Bell. *
- 3 -
<PAGE>
<PAGE>
99.19 Common Stock Purchase Warrant dated effective
as of March 23, 1995, between the Company
and Ruki Renov. *
99.20 Common Stock Purchase Warrant dated
September 11, 1995 between the Company
and Ally Capital Management, Inc. *
99.21 Common Stock Purchase Warrant ($1.875)
dated June 30, 1998, between the Company
and RBB Bank Aktiengesellschaft as
incorporated by reference from Exhibit 4.4
to the Company's Form 8-K, dated June 30,
1998. *
99.22 Common Stock Purchase Warrant ($2.50)
dated June 30, 1998, between the Company
and RBB Bank Aktiengesellschaft as incor-
porated by reference from Exhibit 4.5
to the Company's Form 8-K, dated June 30,
1998. *
99.23 Consulting Agreement dated effective June 30,
1998, between the Company and Liviakis
Financial Communications, Inc. as incor-
porated by reference from Exhibit 4.6
to the Company's Form 8-K, dated June 30,
1998. *
99.24 Common Stock Purchase Warrant effective
June 30, 1998, between the Company and
Liviakis Financial Communications, Inc.
as incorporated by reference from Exhibit
4.7 to the Company's Form 8-K, dated June 30,
1998. *
99.25 Common Stock Purchase Warrant effective
June 30, 1998, between the Company and
Robert B. Prag as incorporated by
reference from Exhibit 4.8 to the Company's
Form 8-K, dated June 30, 1998. *
99.26 Common Stock Purchase Warrant effective
June 30, 1998, between the Company and JW
Genesis Financial Corporation as incor-
porated by reference from Exhibit 10.8
to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998. *
- 4 -
<PAGE>
<PAGE>
99.27 Common Stock Purchase Warrant effective
June 30, 1998, between the Company and
Fontenoy Investments as incorporated by
reference from Exhibit 10.9 to the
Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998. *
99.28 Employment Agreement dated October 1, 1997,
between the Company and Dr. Louis F.
Centofanti is incorporated by reference from
Exhibit 10.9 to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 1997. *
_______________________
*Previously filed
- 5 -
</TABLE>
CONNER & WINTERS
A PROFESSIONAL CORPORATION
LAWYERS
ONE LEADERSHIP SQUARE
211 NORTH ROBINSON, SUITE 1700
OKLAHOMA CITY, OKLAHOMA 73102-7101
August 31, 1998
Perma-Fix Environmental Services, Inc.
1940 Northwest 67th Place, Suite A
Gainesville, Florida 32653
Re: Perma-Fix Environmental Services, Inc.; Amendment
No. 1 to Form S-3 Registration Statement;
Registration No. 333-43149; Registering 9,227,074
Shares of Common Stock; Our File No. 7034.29
__________________________________________________
Ladies and Gentlemen:
We have acted as special counsel to Perma-Fix Environmental
Services, Inc. (the "Company") in connection with the Form S-3
Registration Statement, no 333-43149, as amended (the "Registration
Statement") to be filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Act"), registering up to 9,227,074 shares of
the Company's Common Stock to be reoffered or resold by certain
Selling Shareholders (as defined in the Registration Statement).
The Registration Statement relates to the proposed reoffer or
resale from time to time by certain Selling Shareholders, of the
following:
(i) up to 4,835,561 shares of the Company's Common
Stock, par value $.001 per share ("Common Stock"),
by RBB Bank Aktiengesellschaft ("RBB Bank") that
are issuable by the Company to RBB Bank ("RBB
Shares") as follows:
(a) up to 1,379,311 shares being acquired by RBB
Bank upon conversion of the Company's Series 8
Class H Convertible Preferred Stock, par value
$.001 per share ("Series 8 Class H Preferred
Stock"),
(b) up to 250,000 shares which have been issued or
are issuable as payment of dividends on the
Series 4 Class D Convertible Preferred Stock,
par value $.001 per share ("Series 4 Class D
Preferred Stock"), Series 6 Class F
Convertible Preferred Stock ("Series 6 Class F
<PAGE>
August 31, 1998
Page 2
Preferred Stock"), and Series 8 Class H
Preferred Stock (with the Series 4 Class D
Preferred Stock being exchanged for Series 6
Class F Preferred Stock and the Series 6 Class
F Preferred Stock being exchanged for the
Series 8 Class H Preferred Stock),
(c) up to 656,250 shares being acquired by RBB
Bank upon exercise of the Series 6 Warrants
(as defined in the Registration Statement),
(d) up to 2,200,000 shares being acquired by RBB
Bank upon conversion of the Company's Series
10 Class J Convertible Preferred Stock, par
value $.001 per share ("Series 10 Class J
Preferred Stock") and in payment of dividends
accrued on the Series 10 Class J Preferred
Stock, and
(e) up to 350,000 shares being acquired by RBB
Bank upon exercise of the Series 10 Warrants
(as defined in the Registration Statement);
(ii) up to 271,000 shares of the Company's Common Stock
by The Infinity Fund, L.P. ("Infinity") that are
issuable by the Company to Infinity ("Infinity
Shares") as follows:
(a) up to 200,000 shares being acquired by
Infinity upon conversion of the Company's
Series 9 Class I Convertible Preferred Stock,
par value $.001 per share ("Series 9 Class I
Preferred Stock"),
(b) up to 36,000 shares being acquired by Infinity
as payment of dividends on the Series 5 Class
E Convertible Preferred Stock, par value $.001
per share ("Series 5 Class E Preferred
Stock"), 7 Class G Convertible Preferred
Stock, par value $.001 per share ("Series 7
Class G Preferred Stock"), and Series 9 Class
I Preferred Stock (with the Series 5 Class E
Preferred Stock being exchanged for Series 7
Class G Preferred Stock and the Series 7 Class
G Preferred Stock being exchanged for the
Series 9 Class I Preferred Stock), and
(c) up to 35,000 shares being acquired by Infinity
upon exercise of the Infinity Warrants (as
defined in the Registration Statement);
(iii) up to 1,875,000 shares of Common Stock by
Liviakis Financial Communications, Inc.
("Liviakis") that are issuable by the Company
to Liviakis ("Liviakis Shares") upon the
exercise of a warrant previously issued by the
Company to Liviakis ("Liviakis Warrant");
<PAGE>
August 31, 1998
Page 3
(iv) up to 625,000 shares of Common Stock by Robert B.
Prag, an executive officer of Liviakis ("Prag")
that are issuable by the Company to Prag ("Prag
Shares") upon the exercise of a warrant previously
issued by the Company to Prag ("Prag Warrant");
(v) up to 350,000 shares of Common Stock by Fontenoy
Investments ("Fontenoy") that are issuable by the
Company to Fontenoy ("Fontenoy Shares") upon the
exercise of a warrant previously issued by the
Company to Fontenoy ("Fontenoy Warrant");
(vi) up to 450,000 shares of Common Stock by JW Genesis
Financial Corporation ("JW Genesis") that are
issuable by the Company to JW Genesis (the "JW
Genesis Shares") upon the exercise of the Series 4
Genesis Warrants (as defined in the Registration
Statement) and the Series 10 Genesis Warrants (as
defined in the Registration Statement), all of
which warrants were previously issued by the
Company to JW Genesis or its predecessor JW Charles
Financial Services, Inc. ( hereinafter collectively
referred to as the "JW Genesis Warrants");
(vii) up to 125,000 shares of Common Stock by Sun
Bank, National Association ("Sun Bank") that
are issuable by the Company to Sun Bank ("Sun
Bank Shares") upon the exercise of a warrant
previously issued by the Company to Sun Bank
("Sun Bank Warrant");
(viii) up to 7,000 shares of Common Stock by D. H.
Blair Investment Banking Corporation ("Blair")
that are issuable by the Company to Blair
("Blair Shares") upon the exercise of a
warrant previously issued by the Company to
Blair ("Blair Remainder Warrant") to reflect
the remainder of a warrant for 75,000 shares
of Common Stock which was previously issued by
the Company to Blair ("Blair Warrant") and
which was partially assigned by Blair to
certain officers and directors of Blair;
(ix) up to 28,000 shares of Common Stock by J. Morton
Davis ("Davis") that are issuable by the Company to
Davis ("Davis Shares") upon the exercise of a
warrant previously issued by the Company to Davis
("Davis Warrant") as a result of the assignment by
Blair of a portion of the Blair Warrant;
(x) up to 28,000 shares of Common Stock by Esther
Stahler ("Stahler") that are issuable by the
Company to Stahler ("Stahler Shares") upon the
exercise of a warrant previously issued by the
Company to Stahler ("Stahler Warrant") as a result
of the assignment by Blair of a portion of the
Blair Warrant;
<PAGE>
August 31, 1998
Page 4
(xi) up to 7,000 shares of Common Stock by Martin A.
Bell ("Bell") that are issuable by the Company to
Bell ("Bell Shares") upon the exercise of a warrant
previously issued by the Company to Bell ("Bell
Warrant") as a result of the assignment by Blair of
a portion of the Blair Warrant;
(xii) up to 5,000 shares of Common Stock by Ruki
Renov ("Renov") that are issuable by the
Company to Renov ("Renov Shares") upon the
exercise of a warrant previously issued by the
Company to Renov ("Renov Warrant") as a result
of the assignment by Blair of a portion of the
Blair Warrant;
(xiii) up to 20,513 shares of Common Stock being
acquired by Ally Capital Management ("Ally")
that are issuable by the Company to Ally
("Ally Shares") upon the exercise of a warrant
previously issued by the Company to Ally
("Ally Warrant");
(xiv) up to 100,000 shares of Common Stock being
acquired by Dionysus Limited ("Dionysus") that
are issuable by the Company to Dionysus
("Dionysus Shares") upon the exercise of a
warrant previously issued by the Company to
Dionysus ("Dionysus Warrant");
(xv) up to 350,000 shares of Common Stock being acquired
by Karl H. Ehlert ("Ehlert") that are issuable by
the Company to Ehlert ("Ehlert Shares") upon the
exercise of two (2) warrants previously issued by
the Company to Ehlert ("Ehlert Warrants"); and
(xvi) up to 150,000 shares of Common Stock being
acquired by R. Keith Fetter ("Fetter") that
are issuable by the Company to Fetter ("Fetter
Shares") upon the exercise of two (2) warrants
previously issued by the Company to Fetter
("Fetter Warrants").
We have examined such corporate records, certificates of
officers, other documents and questions of law, as we have
considered necessary or appropriate for the purposes of this
opinion.
On the basis of such examination and review, we are of the
opinion that:
(i) the RBB Shares will constitute, when issued
pursuant to the terms of the Series 4 Class D
Preferred Stock, Series 6 Class F Preferred Stock,
Series 8 Class H Preferred Stock, the Series 6
Warrants, the Series 10 Class J Preferred Stock,
and the Series 10 Warrants, validly issued and
fully paid and nonassessable shares of Common
Stock;
<PAGE>
August 31, 1998
Page 5
(ii) the Infinity Shares will constitute, when issued by
the Company pursuant to the terms of the Series 5
Class E Preferred Stock, Series 7 Class G Preferred
Stock, Series 9 Class I Preferred Stock and the
Infinity Warrants, validly issued and fully paid
and nonassessable shares of Common Stock;
(iii) the Liviakis Shares will constitute, when
issued by the Company pursuant to the terms of
the Liviakis Warrant, validly issued and fully
paid and nonassessable shares of Common Stock;
(iv) the Prag Shares will constitute, when issued by the
Company pursuant to the terms of the Prag Warrant,
validly issued and fully paid and nonassessable
shares of Common Stock;
(v) the Fontenoy Shares will constitute, when issued by
the Company pursuant to the terms of the Fontenory
Warrant, validly issued and fully paid and
nonassessable shares of Common Stock;
(vi) the JW Genesis Shares will constitute, when issued
by the Company pursuant to the terms of the JW
Genesis Warrants, validly issued and fully paid and
nonassessable shares of Common Stock;
(vii) the Sun Bank Shares will constitute, when
issued by the Company pursuant to the terms of
the Sun Bank Warrant, validly issued and fully
paid and nonassessable shares of Common Stock;
(viii) the Blair Shares will constitute, when issued
by the Company pursuant to the terms of the
Blair Remainder Warrant, validly issued and
fully paid and nonassessable shares of Common
Stock; and,
(ix) the Davis Shares will constitute, when issued by
the Company pursuant to the terms of the Davis
Warrant, validly issued and fully paid and
nonassessable shares of Common Stock.
(x) the Stahler Shares will constitute, when issued by
the Company pursuant to the terms of the Stahler
Warrant, validly issued and fully paid and
nonassessable shares of Common Stock.
(xi) the Bell Shares will constitute, when issued by the
Company pursuant to the terms of the Bell Warrant,
validly issued and fully paid and nonassessable
shares of Common Stock.
(xii) the Renov Shares will constitute, when issued
by the Company pursuant to the terms of the
Renov Warrant, validly issued and fully paid
and nonassessable shares of Common Stock.
<PAGE>
August 31, 1998
Page 6
(xiii) the Ally Shares will constitute, when issued
by the Company pursuant to the terms of the
Ally Warrant, validly issued and fully paid
and nonassessable shares of Common Stock.
(xiv) the Dionysus Shares will constitute, when
issued by the Company pursuant to the terms of
the Dionysus Warrant, validly issued and fully
paid and nonassessable shares of Common Stock.
(xv) the Ehlert Shares will constitute, when issued by
the Company pursuant to the terms of the Ehlert
Warrants, validly issued and fully paid and
nonassessable shares of Common Stock.
(xvi) the Fetter Shares will constitute, when issued
by the Company pursuant to the terms of the
Fetter Warrants, validly issued and fully paid
and nonassessable shares of Common Stock.
We consent to the reference to our firm under the heading
"Legal Opinion" and to the filing of this opinion as Exhibit 5.1 to
said Registration Statement.
Very truly yours,
CONNER & WINTERS,
A Professional Corporation
/s/ Conner & Winters, P. C.
IHS:kek
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Perma-Fix Environmental Services, Inc.
Gainesville, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report
dated February 13, 1998, relating to the consolidated financial
statements and schedule of Perma-Fix Environmental Services, Inc.
appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
We also consent to the reference to us under the capition "Experts"
in the Prospectus.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Orlando, Florida
August 31, 1998
