As filed with the Securities and Exchange Commission
on October 21, 1999
Registration No. 333-43149
=================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
AMENDMENT NO. 5
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 (I.R.S. Employer
jurisdiction of Identification
incorporation) Number)
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
<PAGE>
specifically states that this registration statement shall
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
_______________________________
Title of Proposed Proposed
Each Class Number of Maximum Maximum
of Securities Shares Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share Price Fee(5)
______________ ____________ __________ __________ ____________
<S> <C> <C> <C> <C>
Common Stock, 5,754,309(1) $1.4375(2) $8,271,819 $2,299.57
$.001 par value
Common Stock, 2,536,763(3) $1.50 - $5,188,907 $1,442.52
$.001 par value $3.00(4)
_____________________
<FN>
(1) Includes (a) 2,172,762 shares issued or to be issued upon
conversion of the Company's Series 10 Class J Convertible
Preferred Stock ("Series 10 Preferred"), Series 13 Class M
Convertible Preferred Stock ("Series 13 Preferred"), Series
16 Class P Convertible Preferred Stock ("Series 16
Preferred"); (b) 208,757 shares which have been or may be
issued by the Company in payment of dividends accrued on the
Series 10 Preferred, the Series 13 Preferred, which Series 13
Preferred was exchanged for all of the Series 10 Preferred,
the Series 16 Preferred, which Series 16 Preferred was
exchanged for all of the Series 13 Preferred; (c) 2,467,810
shares issued or to be issued upon conversion of the
Company's Series 8 Class H Convertible Preferred Stock
("Series 8 Preferred"), Series 12 Class L Convertible
Preferred Stock ("Series 12 Preferred"), Series 15 Class O
Convertible Preferred Stock ("Series 15 Preferred"); (d)
147,353 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 ("Series 4 Preferred"),
the Series 6 Class F Convertible Preferred Stock ("Series 6
Preferred"), which Series 6 Preferred was exchanged for all
of the Series 4 Preferred, the Series 8 Preferred, which
Series 8 Preferred was exchanged for all of the Series 6
Preferred, the Series 12 Preferred, which Series 12
Preferred was exchanged for all of the Series 8 Preferred,
the Series 15 Preferred, which Series 15 Preferred was
exchanged for all of the Series 12 Preferred; (e) 310,000
shares to be issued upon conversion of the Company's Series
9 Class I Convertible Preferred Stock; (f) 44,453 shares
which may be issued by the Company in payment of dividends
accrued on the Series 5 Class E Convertible Preferred Stock
("Series 5 Preferred"), the Series 7 Class G Convertible
Preferred Stock ("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
("Series 9 Preferred"), which Series 9 Preferred was
exchanged for all of the Series 7 Preferred; (g) 200,000
shares which have been issued by the Company in connection
with an Exchange Agreement; and (h) 203,174 shares which
have been issued by the Company in connection with an Asset
Purchase Agreement.
(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 October 14, 1999.
(3) Includes (a) 100,000 shares to be issued upon exercise of
one warrant at an exercise price of $1.50 per share; (b)
100,000 shares to be issued upon exercise of one warrant at
an exercise price of $1.70 per share; (c) 375,000 shares to
be issued upon exercise of two warrants at an exercise price
of $1.8125; (d) 35,000 shares to be issued upon exercise of
two warrants at an exercise price of $1.8125; (e) 200,000
shares to be issued upon exercise of one warrant at an
exercise price of $1.875; (f) 150,000 shares to be issued
upon exercise of one warrant at an exercise price of $1.875;
(g) 350,000 shares to be issued upon exercise of one warrant
at an exercise price of $1.875; (h) 200,000 shares to be
issued upon exercise of one warrant at an exercise price of
$2.00 per share; (i) 175,000 shares to be issued upon
exercise of one warrant at an exercise price of $2.00 per
share; (j) 75,000 shares to be issued upon exercise of one
warrant at an exercise price of $2.00 per share; (k) 281,250
shares to be issued upon exercise of one warrant at an
exercise price of $2.125 per share; (l) 75,000 shares to be
issued upon exercise of five warrants at an exercise price
of $2.375 per share; (m) 20,513 shares to be issued upon
exercise of one warrant at an exercise price of $2.4375 per
share; (n) 150,000 shares to be issued upon exercise of one
warrant at an exercise price of $2.50 per share; (o) 75,000
shares to be issued upon exercise of one warrant at an
exercise price of $2.50 per share; and (p) 175,000 shares to
be issued upon exercise of one warrant at an exercise price
of $3.00 per share.
(4) Estimated in accordance with Rule 457(g) for the purpose of
calculating the registration fee.
(5) A registration fee of $4,961.37 was previously paid.
</FN>
</TABLE>
<PAGE>
Subject to Completion: Dated October 21, 1999
PROSPECTUS
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
8,291,072 Issued Shares of Common Stock
This prospectus ("Prospectus") covers 8,291,072 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 45). This
includes (i) 2,536,763 shares of Common Stock issuable upon the
exercise of certain Common Stock purchase warrants ("Warrants")
held by certain of the Selling Shareholders, (ii) 2,467,810 shares
of Common Stock issued or issuable upon the conversion of the
Company's Series 8 Class H Convertible Preferred Stock ("Series 8
Preferred") (which was exchanged for the Series 12 Preferred),
Series 12 Class L Convertible Preferred Stock ("Series 12
Preferred") (which was exchanged for the Series 15 Preferred) and
Series 15 Class O Convertible Preferred Stock ("Series 15
Preferred"), held by certain of the Selling Shareholders, (iii)
310,000 shares of Common Stock issuable upon the conversion of the
Company's Series 9 Class I Convertible Preferred Stock ("Series 9
Preferred"), (iv) 2,172,762 shares of Common Stock issued or
issuable upon conversion of the Company's Series 10 Class J
Convertible Preferred Stock ("Series 10 Preferred") (which has been
exchanged for Series 13 Preferred), Series 13 Class M Convertible
Preferred Stock ("Series 13 Preferred") (which has been exchanged
for Series 16 Preferred), and Series 16 Class P Convertible
Preferred Stock ("Series 16 Preferred") held by certain of the
Selling Shareholders, (v) 400,563 shares of Common Stock issued or
issuable in payment of accrued dividends on the Series 9 Preferred,
Series 15 Preferred, and Series 16 Preferred 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 6
Preferred (which was exchanged for the Series 8 Preferred), Series
8 Preferred (which was exchanged for the Series 12 Preferred),
Series 12 Preferred (which was exchanged for the Series 15
Preferred), Series 15 Preferred, Series 5 Preferred (which was
exchanged for the Series 7 Preferred), Series 7 Preferred (which
was exchanged for the Series 9 Preferred), Series 9 Preferred and
Series 10 Preferred (which was exchanged for the Series 13
Preferred), Series 13 Preferred (which was exchanged for the Series
16 Preferred), and Series 16 Preferred, as such terms are defined
in "Private Placements and Exchange Agreements" (vi) 203,174 shares
of Common Stock issued in connection with a certain Asset Purchase
Agreement, and (vii) 200,000 shares of Common Stock issued in
connection with a certain Exchange Agreement. 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 (together with any amendments thereto, 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 October 13, 1999, the closing bid price
of the Company's Common Stock as quoted by the NASDAQ was $1.4375
per share.
The Selling Shareholders and any broker-dealer or agents that
participate with the Selling Shareholders in the distribution of
the Shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended (the
"Securities Act").
<PAGE>
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.
___________________________________
Investment in these securities involves a high degree of
risk. See "risk factors" on page 5 of this prospectus
for a discussion of certain factors that prospective
investors should consider prior to an investment in these
securities.
___________________________________
The Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
___________________________________
The date of this Prospectus is October ____, 1999.
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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, including the Selenium Process (as defined),
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) integration of Chem-Met,
Chemical Florida and Chemical Georgia (as such terms are defined)
into the Company, (xiii) ability to pay the Promissory Notes issued
in connection with the acquisition of Chem-Met, Chemical Florida
and Chemical Georgia from working capital and/or borrowings under
the Company's revolving credit facility, (xiv) the adoption of
moratoriums or limitations by federal or state governments
regarding the creation of new hazardous waste regulations, and (xv)
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, including the Selenium Process, in the conduct of
operations 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), at PFM's (as defined)
facility at Memphis, Tennessee, or at certain properties acquired
in the purchase of Chemical Georgia and Chem-Met 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) the inability of the
Company to obtain under certain circumstances shareholder approval
of the transaction in which the Series 10 Preferred (which has been
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<PAGE>
exchanged for the Series 13 Preferred, which, in turn, was
exchanged for the Series 16 Preferred) and certain warrants were
issued, (xxi) the inability of the Company to maintain the listing
of its Common Stock on the NASDAQ, (xxii) the discovery of
additional contamination or expanded contamination at the Chemical
Georgia or Chem-Met facilities, (xxiii) the inability of the
Company to continue its operation of Chem-Met under the Consent
Decree (as defined), (xxiv) the validity and accuracy of the
assumptions used in calculating the Company's estimated remediation
costs regarding certain properties in Georgia and Michigan and
(xxv) 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 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 the Registration Statement under 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, 1998;
(2) Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999;
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<PAGE>
(3) Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999;
(4) Current Report on Form 8-K, earliest event reported
April 8, 1999;
(5) Current Report on Form 8-K, earliest event reported
June 1, 1999; and
(6) Current Report on Form 8-K/A, earliest event reported
June 1, 1999.
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, and there is no
assurance that the Company will be able to become profitable on an
annualized basis in the foreseeable future. The Company's
historical consolidated balance sheet at December 31, 1998,
reflected an accumulated deficit of approximately $22,157,000. The
Company's consolidated statement of operations for the year ended
December 31, 1998, reflected a net loss applicable to Common Stock
of approximately $698,000, or a net loss of approximately $.06 per
share, after taking into account a preferred stock dividend of
$1,160,000 relating to dividends paid and the issuance by the
Company of a series of convertible preferred stock in 1998 that is
convertible at a discount from market value of the Common Stock on
the date of issuance as discussed below. This is compared to a net
loss applicable to Common Stock of approximately $5,169,000, or a
net loss of approximately $.49 per share, after taking into account
the loss from discontinued operations of $4,101,000, or $.39 per
share, and a preferred stock dividend of $1,260,000 relating to
dividends paid and the issuance by the Company of a series of
convertible preferred stock in 1997 that is convertible at a
discount from market value of the Common Stock on the date of
issuance as discussed below for the year ended December 31, 1997.
For the three months ended June 30, 1999, the Company had an
unaudited consolidated net income of approximately $703,000 (after
taking into account a preferred stock dividend of $73,000) on
unaudited consolidated net revenues of approximately $10,573,000,
as compared to an unaudited consolidated net income of
-5-
<PAGE>
approximately $127,000 (after taking into account a preferred stock
dividend of $89,000) on unaudited consolidated net revenues of
approximately $7,678,000 for the three months ended June 30, 1998.
For the six month period ended June 30, 1999, the Company had an
unaudited consolidated net income of approximately $717,000 (after
taking into account a preferred stock dividend of $190,000) on
unaudited consolidated net revenues of approximately $18,385,000,
as compared to an unaudited consolidated net loss of approximately
$364,000 (after taking into account a preferred stock dividend of
$176,000) on unaudited consolidated net revenues of approximately
$14,226,000 for the six months ended June 30, 1998. 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.
In March 1997, the Commission announced its position on
accounting for preferred stock which is or may be convertible into
Common Stock at a discount from the market price of the Common
Stock on the date of issuance of the series of preferred stock.
The Commission's position, pursuant to Emerging Issues Task Force
("EITF") D-60, is that a preferred stock dividend should be
recorded for the difference between the conversion price and the
quoted market price of the Common Stock as determined at the date
of issuance of such preferred stock. To comply with this position,
the Company restated its 1996 consolidated financial statements to
reflect a preferred stock dividend of approximately $2,000,000
related to the sale of convertible preferred stock in 1996. The
Company also restated the reported net loss per share of Common
Stock for the year ended December 31, 1996, to ($.27), from the
previously reported amount of ($.05). Pursuant to EITF D-60 and
EITF D-42, the Company has also restated its 1997 consolidated
financial statements to reflect a preferred stock dividend of
approximately $713,000 related to the sales and subsequent
exchanges of preferred stock in 1997 and a preferred stock dividend
of approximately $195,000 related to the issuance of warrants in
1997 in connection therewith. The restatement reflects dividends
totaling $908,000 resulting from the sale of convertible preferred
stock in 1997, of which approximately $111,000 was attributable to
the quarter ended June 30, 1997, and approximately $797,000 was
attributable to the quarter ended September 30, 1997. The
Company's consolidated financial statements for the year ended
December 31, 1998, reflected an additional preferred stock dividend
of approximately $750,000 as a result of the issuance of the Series
10 Preferred and various warrants associated therewith during 1998.
Potential Environmental Liability
The nature of the Company's business of rendering services in
connection with management of waste, including certain types of
hazardous waste and low level radioactive waste, 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."
Potential Adverse Effects on Price of Common Stock
Due to Conversion of Convertible Preferred Stock; Potential
Dilution
The Company has 4,537 shares of convertible preferred stock
currently outstanding, including the Series 9 Preferred, Series 14
Class N Convertible Preferred Stock (the "Series 14 Preferred"),
Series 15 Preferred, and Series 16 Preferred. Subject to
fulfillment of certain terms and conditions, the holders of the
preferred stock have the right to convert the preferred stock into
Common Stock. It is anticipated by the Company that by exercising
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<PAGE>
their conversion rights, the holders of the preferred stock would
be issued a substantial number of shares of Common Stock. Such a
substantial increase in the number of outstanding shares of Common
Stock would result in dilution of the Common Stock, which may have
an adverse effect upon the market price of the Common Stock and
could impair the Company's ability to raise additional equity
capital. In addition, the issuance by the Company of future priced
securities may be followed by a decline in the price of the
Company's Common Stock, thereby resulting in additional dilution to
the holders of the Company's Common Stock. See "--Potential
Adverse Effects of Floating-Price Convertible Preferred Stock."
Potential Adverse Effects of Floating-Price Convertible Preferred
Stock
The conversion of various series of the Company's outstanding
preferred stock could potentially result in an issuance of a
substantial number of shares of Common Stock, which could, among
other things, (i) reduce the percentage ownership of existing
common shareholders, (ii) depress the price of the Common Stock,
and (iii) detrimentally affect the Company's ability to raise
additional equity capital. The Company has 4,537 shares of
preferred stock currently outstanding (Series 9 Preferred, Series
14 Preferred, Series 15 Preferred and Series 16 Preferred) which
are convertible into shares of Common Stock.
There are currently 350 shares of Series 9 Preferred. The
floating conversion price of the Series 9 Preferred is the lesser
of (i) $1.8125 and (ii) 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 80% if at
the time of conversion the price of the Common Stock is less than
$2.265 per share. Because there is no minimum conversion price,
the number of shares of Common Stock which may be issuable pursuant
to conversion of the Series 9 Preferred will increase as the
closing bid price of the Common Stock goes below $2.265 per share.
The more the closing bid price falls below $2.265, the more shares
of Common Stock are issuable upon conversion of the Series 9
Preferred. See table below in this Risk Factor.
There are currently 1,769 outstanding shares of Series 14
Preferred. The Series 14 Preferred was issued in exchange for the
Series 11 Preferred, which, previously had been exchanged for the
Series 3 Preferred. From April 20, 1999 until April 20, 2000, the
Series 14 Preferred may not be converted. From April 20, 2000
until April 20, 2001, the conversion price of the Series 14
Preferred is $1.50 per share. After April 20, 2001, the floating
conversion price of the Series 14 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%, and the conversion price has a minimum of $0.50
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 14 Preferred, at no time will
a quarter that has already been considered in such determination be
considered in any subsequent determination.
There are currently 616 outstanding shares of Series 15
Preferred. From April 20, 1999 until April 20, 2000, the Series 15
Preferred may not be converted. After April 20, 2000, the floating
conversion price of the Series 15 Preferred is the lesser of (i)
$1.8125 and (ii) 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 80% if at the time of
conversion the price of the Common Stock is less than $2.265 per
share, except from April 20, 2000, until April 20, 2001, the
minimum conversion price of the Series 15 Preferred is $1.50 per
share. Because there is no minimum conversion price after April
20, 2001, the number of shares of Common Stock which may then be
issuable pursuant to conversion of the Series 15 Preferred will
increase as the closing bid price of the Common Stock goes below
-7-
<PAGE>
$2.265 per share. The more the closing bid price falls below
$2.265, the more shares of Common Stock are issuable upon
conversion of the Series 15 Preferred. See table below in this
Risk Factor.
There are currently 1,802 outstanding shares of Series 16
Preferred. From April 20, 1999 until April 20, 2000, the Series 16
Preferred may not be converted. After April 20, 2000, the floating
conversion price of the Series 16 Preferred is the lesser of (i)
$1.875 and (ii) 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 80% if at the time of
conversion the price of the Common Stock is less than $2.34 per
share, except from April 20, 2000 until April 20, 2001, the minimum
conversion price of the Series 16 Preferred is $1.50 per share.
Because there is no minimum conversion price after April 20, 2001,
the number of shares of Common Stock which may be issuable pursuant
to conversion of the Series 16 Preferred will increase as the
closing bid price of the Common Stock goes below $2.34 per share.
The more the closing bid price falls below $2.34, the more shares
of Common Stock are issuable upon conversion of the Series 16
Preferred. See table below in this Risk Factor.
Pursuant to the terms of the Company's agreements with the
holders of the preferred stock, the holders of such preferred stock
may not sell the Company's Common Stock "short" while they hold any
of the shares of preferred stock or any Common Stock into which
such preferred stock was converted. Upon conversion of the various
series of preferred stock, the Company is required to issue the
shares of Common Stock pursuant to the terms of the preferred
stock. There are no provisions which allow the Company upon
conversion to tender a cash payment to the applicable holder in
lieu of the issuance of Common Stock.
The tables below are provided in an attempt to approximate the
potential issuance of Common Stock which could result from
conversion of the Company's currently outstanding preferred stock
assuming various average closing bid prices for the five days prior
to conversion. As the price of the Common Stock moves downward,
the number of shares of Common Stock which may be issued upon
conversion of the Series 9 Preferred, Series 14 Preferred, Series
15 Preferred and Series 16 Preferred increases, subject to the
indicated minimum conversion prices. The first table approximates
the potential issuance from April 20, 2000 until April 20, 2001,
during which time the Series 14 Preferred, Series 15 Preferred and
Series 16 Preferred have a minimum conversion price of $1.50. The
second table approximates the potential issuance after April 20,
2001.
-8-
<PAGE>
<TABLE>
<CAPTION>
Estimated Potential Additional Issuance from April 20, 2000 until
April 20, 2001
_________________________________________________________________
<S> <C> <C> <C> <C>
Average Closing Bid Price $2.50 $2.00 $1.00 $0.25
of Common Stock for five
days prior to conversion
Series 9 Conversion Price $1.8125(1) $1.60(1) $0.80(1) $0.20(1)
Price (maximum $1.8125)
Number of Shares of 193,103 218,750 437,500 1,750,000
Common Stock Issuable
upon Series 9 Conversion
Series 14 Conversion $1.50(2) $1.50(2) $1.50(2) $1.50(2)
Price (minium $1.50,
maximum $1.50)
Number of Shares of 1,179,333 1,179,333 1,179,333 1,179,333
Common Stock Issuable
upon Series 14 Conversion
Series 15 Conversion $1.8125(1) $1.60(1) $1.50(1) $1.50(1)
Price (minimum $1.50,
maximum $1.8125)
Number of Shares of 339,862 385,000 410,667 410,667
Common Stock Issuable
upon Series 15 Conversion
Series 16 Conversion $1.875(1) $1.60(1) $1.50(1) $1.50(1)
Price (minimum $1.50,
maximum $1.875)
Number of Shares of 961,067 1,126,250 1,201,333 1,201,333
Common Stock Issuable
upon Series 16 Conversion
Total shares of Common 2,673,365 2,909,333 3,228,833 4,541,333
Stock Issuable Upon
Conversion
<FN>
(1) 80% of the product of the average of the closing bid quotation
of the Common Stock for the five trading days immediately
preceding the conversion date, subject to the stated minimum
and maximum conversion price.
(2) 75% of the product of the average of the closing bid quotation
of the Common Stock for the five trading days immediately
preceding the conversion date, subject to the stated minimum
and maximum conversion price.
</FN>
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Estimated Potential Additional Issuance after April 20, 2001
____________________________________________________________
<S> <C> <C> <C> <C>
Average Closing Bid Price $2.50 $2.00 $1.00 $0.25
of Common Stock for five
days prior to conversion
Series 9 Conversion Price $1.8125(1) $1.60(1) $0.80(1) $0.20(1)
(maximum $1.8125)
Number of Shares of 193,103 218,750 437,500 1,750,000
Common Stock Issuable
upon Series 9 Conversion
Series 14 Conversion $1.50(2) $1.50(2) $0.75(2) $0.50(2)
Price (minimum $0.50,
maximum $1.50)
Number of Shares of 1,179,333 1,179,333 2,358,667 3,538,000
Common Stock Issuable
upon Series 14 Conversion
Series 15 Conversion Price $1.8125(1) $1.60(1) $0.80(1) $0.20(1)
(maximum ($1.8125)
Number of Shares of 339,862 385,000 770,000 3,080,000
Common Stock Issuable
Series 16 Conversion $1.875(1) $1.60(1) $0.80(1) $0.20(1)
Price (maximum $1.875)
Number of Shares of 961,067 1,126,250 2,252,500 9,010,000
Common Stock Issuable
upon Series 16 Conversion
Total shares of Common 2,673,365 2,909,333 5,818,667 17,378,000(3)
Stock Issuable Upon
Conversion
<FN>
(1) 80% of the product of the average of the closing bid quotation
of the Common Stock for the five trading days immediately
preceding the conversion date, subject to the stated maximum..
(2) 75% of the product of the average of the closing bid quotation
of the Common Stock for the five trading days immediately
preceding the conversion date, subject to the stated minimum
and maximum. The minimum conversion price of the Series 14
Preferred 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. See "-Potential Adverse Effects of
Floating-Price Convertible Preferred Stock."
(3) The Company has 50,000,000 shares of Common Stock authorized
for issuance. There are 20,486,219 shares of Common Stock
issued and outstanding as of the date of this Prospectus, and
4,624,963 shares are issuable upon exercise of warrants
outstanding as of the date of this Prospectus. The Company
might not have sufficient shares of Common Stock authorized
but unissued if it were required to issue 17,378,000 shares
upon conversion of the Series 9 Preferred, Series 14
Preferred, Series 15 Preferred and Series 16 Preferred and
4,624,963 shares upon exercise of all such outstanding
warrants.
</FN>
</TABLE>
-10-
<PAGE>
Shareholder Approval Requirements
The NASDAQ requires that the Company obtain the approval of
its shareholders regarding any transaction (other than a public
offering) involving the sale or issuance of common stock or
securities convertible into common stock which equals 20% or more
of the common stock outstanding before the transaction at a price
less than the current market value of the common stock at the time
of such sale. The transaction in which the Company issued the
Series 10 Preferred and various warrants in connection therewith
could, under certain circumstances, result in the issuance of 20%
or more of the Common Stock outstanding before such transaction at
a price less than the current market value of the Common Stock at
the time of the sale of the Series 10 Preferred. See "-Potential
Adverse Effects of Floating-Price Convertible Preferred." In order
to comply with the requirements of the NASDAQ and to be able to
list the shares of Common Stock issuable upon conversion of the
Series 10 Preferred and the warrants granted in connection
therewith on the NASDAQ, the terms of the Series 10 Preferred and
the warrants issued in connection with the Series 10 Preferred
contain provisions requiring the Company to obtain shareholder
approval under certain circumstances. Under the terms of the
Series 10 Preferred and the warrants issued in connection
therewith, 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 Aktiengesellschaft, located in Graz, Austria ("RBB
Bank"), the holder of the Series 10 Preferred, 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, which was the date of the agreement
relating to the sale of the Series 10 Preferred), 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. As of the
date of this Prospectus, RBB Bank has converted 748 shares of
Series 10 Preferred into an aggregate of 971,429 shares of Common
Stock, and the Company has issued a total of 64,597 shares of
Common Stock in payment of dividends on the Series 10 Preferred
prior to the Series 10 Preferred being exchanged for the Series 13
Preferred. Such conversion was at a price below $1.875 per share
of Common Stock. Additionally, after the exchange of the Series 13
Preferred for the Series 10 Preferred, and prior to the exchange of
the Series 13 Preferred for Series 16 Preferred, 450 shares of
Series 13 Preferred were redeemed by the Company, at $1,000 per
share (the liquidation value), leaving 1,802 shares of Series 13
Preferred outstanding that were exchanged for an equal number of
Series 16 Preferred, which are outstanding as of the date of this
Prospectus.
The Series 13 Preferred, which were issued in exchange for the
Series 10 Preferred, and the Series 16 Preferred, which were issued
in exchange for the Series 13 Preferred, are subject to the same
shareholder approval requirements as the Series 10 Preferred. The
aggregate number of shares of Common Stock issued upon conversion
of the Series 10 Preferred (which has been exchanged for the Series
13 Preferred), Series 13 Preferred (which has been exchanged for
the Series 16 Preferred) or the outstanding Series 16 Preferred,
and in payment of dividends thereon, are all considered to be part
of the 2,388,347 shares of Common Stock which may be issued without
shareholder approval.
The Liviakis Warrant and the Prag Warrant (as defined in
"Private Placements and Exchange Agreements RBB Series 10 Private
Placement") which were issued in connection with the Series 10
Preferred and allowed the purchase of 2,500,000 shares of Common
Stock have been canceled and exchanged for 200,000 shares of Common
Stock pursuant to an Exchange Agreement dated March 14, 1999. The
Company believes that the NASDAQ would consider these 200,000
shares to be part of the shares issued in connection with the
Series 10 Preferred, Series 13 Preferred and Series 16 Preferred
and part of the 2,388,347 shares of Common Stock which may be
issued without shareholder approval.
-11-
<PAGE>
As an example, assuming (a) none of the warrants issued in
connection with the Series 10 Preferred have been or will be
exercised, (b) all of the shares of Series 16 Preferred are
converted after April 20, 2001, when the average of the closing bid
prices for the Common Stock for the five days prior to conversion
is less than approximately $2.23 per share and (c) the 200,000
shares of Common Stock issued to Liviakis and Prag (as defined in
"Private Placements and Exchange Agreements RBB Series 10 Private
Placement") are considered to have been issued in connection with
the Series 10 Preferred, shareholder approval would be required
because such conversion would result in the issuance of more than
2,388,347 shares of Common Stock when combined with the 971,429
shares of Common Stock which have been issued as of the date of
this Prospectus upon conversion of the 748 shares of Series 10
Preferred. If the Series 16 Preferred were converted at a
conversion price of $1.50, which is the minimum conversion price
until April 20, 2001 and assuming none of the warrants issued in
connection with the Series 10 Preferred have been or will be
exercised, conversion of more than 1,728 shares of the 1,802 Series
16 Preferred remaining outstanding would require shareholder
approval under the terms of the Series 16 Preferred and the
warrants issued in connection with the issuance of the Series 10
Preferred. The Company believes that it is likely that shareholder
approval regarding the Series 10 Preferred transaction will be
required at some time in the future.
Since RBB Bank has already converted certain shares of the
Series 10 Preferred at a price below $1.875, if the Company were to
issue in excess of 2,388,347 shares of Common Stock upon conversion
of the Series 10 Preferred and Series 16 Preferred and the exercise
of the warrants granted in connection with the issuance of the
Series 10 Preferred without obtaining shareholder approval under
the above-described circumstances, the NASDAQ could de-list the
Common Stock or could refuse to list the shares of Common Stock in
excess of 2,388,347, either of which actions would have a material
adverse effect upon the Company. See "--Maintaining Exchange
Listing."
Pursuant to the terms of the Series 16 Preferred (which terms
were contained in the Series 10 Preferred), if the Company does not
obtain shareholder approval within ninety days of the earlier of
the Company's receipt of (i) a conversion notice triggering the
need for shareholder approval or (ii) a notice from the holder of
the Series 16 Preferred that the Common Stock has traded after
January 1, 1999, at a five day average closing bid price below
$2.34 per share and that the holder wishes that shareholder
approval be obtained, then the Company must pay liquidated damages
to the holder of the Series 16 Preferred in an amount of 4% per
month of the Series 16 Liquidation Value until shareholder approval
is obtained. Neither event has occurred as of the date of this
Prospectus. If the Company is required to make such payment to the
holder of the Series 16 Preferred, such payment could have a
material adverse effect upon the Company.
Maintaining Exchange Listing
Maintaining the listing of the Common Stock on the NASDAQ is
of importance to the Company. The de-listing of the Common Stock
from the NASDAQ would have a material adverse effect upon the
marketability of the Common Stock and could, among other things,
materially and adversely affect the Company's ability to raise
additional equity capital or to obtain financing through other
sources. The NASDAQ has numerous requirements which must be
complied with for a company to maintain its security's listing on
the NASDAQ, one of which is that the minimum bid price of the
security must be $1.00 or greater per share. If the minimum bid
price of the Common Stock were below $1.00 per share for a period
of 30 or more consecutive business days, the NASDAQ could take
action to de-list the Common Stock from the NASDAQ. As of the
close of business on October 13, 1999, the closing price of the
Common Stock was $1.4375 per share as quoted on the NASDAQ.
Additionally, the NASDAQ could take action to de-list the Common
Stock from the NASDAQ if the Company were to fail to meet any of
the NASDAQ listing requirements. The Company notes that in
addition to the specific criteria for listing of shares on the
NASDAQ, the NASDAQ also has discretionary authority under which it
can require additional or more stringent criteria for the listing
of a particular security otherwise qualified for listing if NASDAQ
deems such is necessary to protect the public interest. See
"-Shareholder Approval Requirements" and "-Voting Control; Ability
to Direct Management."
-12-
<PAGE>
If the Common Stock were de-listed from the NASDAQ, trading
would thereafter be reported on the Boston Stock Exchange and/or in
the National Association of Securities Dealers ("NASD") Over the
Counter Bulletin Board or in the "pink sheets." The investing in
securities traded in the Bulletin Board or in the pink sheets is
generally considered to be subject to more risk than comparable
investing in securities which are traded on one of the major
national securities exchanges such as the NASDAQ or the American
Stock Exchange. In the event of de-listing from the NASDAQ, the
Common Stock may be classified as a "penny stock" by the Commission
and would become subject to rules adopted by the Commission
regulating broker-dealer practices in connection with transactions
in "penny stocks." Broker-dealers recommending a penny stock must,
among other things, document the suitability of the investment for
the specific customer, obtain a written agreement of the customer
to purchase the penny stock, identify such broker-dealer's role, if
any, as a market maker in the particular stock, and provide
information with respect to market prices of the Common Stock and
the amount of compensation that the broker-dealer will earn in the
proposed transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary
market for the Common Stock. If the Common Stock became subject to
the penny stock rules, many broker-dealers may be unwilling to
engage in transactions in the Company's securities because of the
added disclosure requirements, thereby making it more difficult for
purchasers of the Common Stock in this offering to dispose of their
shares of the Common Stock. The ownership of penny stock is
generally considered to subject the owner to greater risks than the
ownership of common stock as a whole due, among other things, to
the smaller trading volume in such stocks and to the substantial
impact upon the stock's overall value which results from small
stock price variations.
Potential Adverse Effect to Company and Potential Adverse Impact on
Earnings Per Share Upon Exercise of Outstanding Warrants and
Options and Conversion of Outstanding Preferred Stock
The issuance of Common Stock pursuant to various outstanding
warrants, options, and convertible preferred stock may potentially
have a substantial and material adverse impact on the earnings per
share of the Company, existing shareholders' percentages of the
outstanding shares of Common Stock, as well as on the ability of
the Company to raise additional equity capital. The Company has
outstanding warrants to purchase up to approximately 4,624,963
shares of Common Stock, including, without limitation, the Series
3 Warrants, Series 6 Warrants, Series 10 Warrants, and the other
warrants for purchase of shares of Common Stock covered in this
Prospectus (as defined and described under "Summary of Securities
Being Offered") and outstanding options to purchase up to
approximately 1,322,255 shares of Common Stock. The exercise
prices of the outstanding warrants for purchase of shares of the
Company's Common Stock range from $ 1.50 per share to $3.50 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 1,179,333 shares of Common Stock upon
conversion of the Series 14 Preferred, (ii) up to approximately
410,667 shares of Common Stock upon conversion of the Series 15
Preferred and (iii) up to approximately 1,201,333 shares of Common
Stock upon conversion of the Series 16 Preferred assuming that such
conversions are made on or prior to April 20, 2001, when the
minimum conversion price is $1.50 per share. The Company is also
obligated to issue to The Infinity Fund, L.P. ("Infinity") up to
approximately 304,348 shares of Common Stock upon conversion of the
Series 9 Preferred, assuming the average of the closing bid
quotations of the Common Stock for the five trading days
immediately preceding each conversion date of the Series 9
Preferred equals $1.4375 per share, which was the closing price of
the Common Stock on October 13, 1999. 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 9 Preferred may exceed the
amounts indicated above. The Series 14 Preferred, Series 15
Preferred and Series 16 Preferred are not convertible until April
20, 2000, and until April 20, 2001, such preferred stock has a
minimum conversion price of $1.50 per share.
As of the close of business on October 13, 1999, the closing
price of the Common Stock was $1.4375 per share as quoted on
the NASDAQ. If, after April 20, 2001, the holders of the Series 9
-13-
<PAGE>
Preferred, Series 14 Preferred, Series 15 Preferred and Series 16
Preferred converted all of the shares of Series 9 Preferred, Series
14 Preferred, Series 15 Preferred and Series 16 Preferred
outstanding as of the date of this Prospectus and at the time of
such conversion the closing bid price of the Common Stock, as quoted
on the NASDAQ averaged $1.4375 per share for five trading days
immediately prior to such conversion (which is the closing bid
price of the Common Stock on October 13, 1999), the holders of the
Series 9 Preferred, Series 14 Preferred, Series 15 Preferred and
Series 16 Preferred would receive a total of 3,421,720 shares of
Common Stock as a result of the conversion. If, after April 20,
2001, the holders of the Series 9 Preferred, the Series 14
Preferred, the Series 15 Preferred, the Series 16 Preferred
converted all of the shares of such preferred stock outstanding as
of the date of this Prospectus and at the time of conversion the
average closing bid price is less than $1.4375 for five trading
days immediately preceding such conversion, the number of shares of
Common Stock that the holders would be entitled to receive as a
result of the conversion would substantially increase. See the
table under "--Potential Adverse Effects of Floating - Price
Convertible Preferred Stock." In addition, the terms of Series 9
Preferred, Series 14 Preferred, Series 15 Preferred and Series 16
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 9 Preferred, Series 14 Preferred, Series 15 Preferred and
Series 16 Preferred in shares of Common Stock rather than cash if
and when declared by the Board of Directors. Under the Company's
loan agreement, the Company is prohibited from paying cash
dividends without the lender's prior written consent. 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 9 Preferred, Series 14 Preferred, Series 15 Preferred
and Series 16 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 9 Preferred, Series 14 Preferred, Series 15 Preferred and
Series 16 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 shareholder'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."
Voting Control; Ability to Direct Management
RBB Bank may have the ability to affect a change in control of
the Company through conversion of a substantial portion of the
outstanding convertible preferred stock and the exercise of
outstanding warrants held by it. Prior to the conversion of the
outstanding shares of the Company's Series 9 Preferred, Series 14
Preferred, Series 15 Preferred and Series 16 Preferred or the
exercise of any outstanding warrants and options, approximately
14.6% 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 2.4% 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 16.7% of the
outstanding shares of Common Stock.
As of the date of this Prospectus, RBB Bank owns of record
6,751,482 shares of Common Stock, or approximately 33.0% of the
outstanding shares of Common Stock as of the date of this
Prospectus. RBB Bank is also the owner of record of all of the
outstanding shares of the Company's Series 14 Preferred, Series 15
Preferred and Series 16 Preferred which are convertible into
approximately 2,791,333 shares of Common Stock. See "-- Potential
-14-
<PAGE>
Adverse Effect to Company and Potential Adverse Impact on Earnings
Per Share Upon Exercise of Outstanding Warrants and Options and
Conversion of Outstanding Preferred Stock." The foregoing
estimates are based on various assumptions and do not include the
shares of Common Stock which may be issued to RBB Bank in payment
of dividends accrued on the Series 14 Preferred, Series 15
Preferred and the Series 16 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 9 Preferred, Series 14 Preferred, Series
15 Preferred and Series 16 Preferred may greatly exceed the amounts
indicated above. For the Series 14 Preferred, subject to the
minimum conversion price of $0.50, the further the average closing
bid quotation for the Common Stock five trading days immediately
preceding each conversion date is below $2.00, the more shares of
Common Stock are issuable upon conversion of the Series 14
Preferred. For the Series 9 Preferred and Series 15 Preferred, the
further the average closing bid quotation for the Common Stock five
trading days immediately preceding each conversion date is below
$2.265, the more shares of Common Stock are issuable upon
conversion of the Series 9 Preferred and Series 15 Preferred. For
the Series 16 Preferred, the further the average closing bid
quotation for the Common Stock five trading days immediately
preceding each conversion date is below $2.34, the more shares of
Common Stock are issuable upon conversion of the Series 16
Preferred. See "--Potential Adverse Effects of Floating-Price
Convertible Preferred Stock" and "Summary of Securities Being Offered."
As of the close of business on October 13, 1999, the closing
price of the Common Stock was $1.4375 per share. If RBB Bank were
to convert after April 20, 2001, all of the presently outstanding
shares of the Company's preferred stock held by RBB Bank (Series 14
Preferred, Series 15 Preferred and the Series 16 Preferred) at a
time when the average closing bid quotation for the Common Stock
for the five trading days was $1.4375 then RBB Bank would be
entitled to receive a total of approximately 3,117,372 shares of
Common Stock as a result of such conversion.
In addition to the shares of the Company's Common Stock and
preferred stock of the Company held by RBB Bank, RBB Bank holds
warrants which were issued in connection with the issuance of the
Series 3 Preferred ("Series 3 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 an aggregate of an additional 2,791,333
shares of Common Stock on conversion of the Series 14 Preferred,
Series 15 Preferred and Series 16 Preferred and 3,006,250 shares of
Common Stock upon the exercise of the Series 3 Warrants, Series 6
Warrants and Series 10 Warrants, RBB Bank will own approximately
12,549,065 shares of Common Stock (which includes the 6,751,482
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 14
Preferred, Series 15 Preferred, and Series 16 Preferred),
representing approximately 47.7% 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."
In the event there were such a change of control of the
Company, the NASDAQ could deem such to be a change in financial
structure or a merger or consolidation with RBB Bank. In such
event, the NASDAQ could require the Company to requalify under the
initial listing standards of the NASDAQ in order to maintain the
listing of the Company's Common Stock on the NASDAQ. Among other
things, the Company's Common Stock would have to have a minimum bid
price of $4.00 per share to be eligible for listing on the NASDAQ.
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The market price of the Common Stock as of the effective date of
this Prospectus is below $4.00 and would not meet the NASDAQ
initial listing requirements. See "-- Maintaining Exchange
Listing."
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
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, all of which may provide
the basis for litigation against the Company. 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."
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Adequacy of 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 Environmental
Expenditures." The Company believes that its insurance coverage is
presently adequate and similar to or greater than the coverage
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. The
Company is not aware of any current federal or state (Florida,
Ohio, Oklahoma, Michigan and Georgia, the states in which the
Company or a subsidiary of the Company has a TSD Facility (as
defined)) government or agency efforts in which a moratorium or
limitation has been or will be placed upon the creation of new
hazardous waste regulations that would have a material adverse
effect on the Company; however, no assurance can be made that such
a moratorium or limitation will not be implemented in the future.
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,
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human and other resources than the Company. The increased
competition in the waste management industry has resulted in
reduced gross margin levels, which may 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."
No Dividends Paid
Since its inception, the Company has not paid cash dividends
on its Common Stock and the Company does not anticipate paying any
cash dividends in the foreseeable future. The Company intends to
retain future earnings, if any, to provide funds for the operation
and/or expansion of its business.
The terms of the Series 9 Preferred, Series 14 Preferred,
Series 15 Preferred and Series 16 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 9 Preferred, Series 14 Preferred,
Series 15 Preferred and Series 16 Preferred in shares of Common
Stock if and when declared and paid by the Board of Directors of
the Company. Pursuant to its various subscription and exchange
agreements with the holders of its convertible preferred stock, the
Company has registered a certain number of shares of Common Stock
to be issuable in payment of such dividends. The actual number of
shares of Common Stock issuable in payment of such accrued
dividends may be greater or lesser than the number which have been
registered depending upon, among other things, the length of time
the preferred stock is outstanding and the price of the Common
Stock at the time of payment of dividends. The Company's loan
agreement prohibits the Company from paying cash dividends on its
outstanding preferred stock without the lender's prior written
consent. See "--Potential Adverse Effect to Company and
Potential 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."
Loss Carry Forwards
The Company's net loss carry forwards are subject to various
limitations and have not been approved by the Internal Revenue
Service ("IRS"). The Company's net loss carry forwards have
resulted from certain of the Company's losses and the Company
anticipates they may be used to reduce the federal income tax
payments which the Company would otherwise be required to make with
respect to income, if any, generated in future years. The Company
has estimated its available net operating loss carry forwards for
federal income tax purposes of approximately $10.8 million at
December 31, 1998, based on its federal income tax returns as filed
with the IRS for taxable years through 1998. The use of the net
operating loss carry forwards is, however, subject to certain
limitations and they will expire to the extent not utilized by the
years 2006 through 2015. See "The Company--Availability of
Company's Loss Carry Forwards." Net operating losses may be further
limited under the provision of Treasury Regulations 1.1502-21
regarding Separate Return Limitation Years. In addition, the
amount of these carry forwards has not been audited or approved by
the IRS, and, accordingly, no assurance can be given that such
carry forwards will not be reduced as a result of audits in the
future.
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Barriers to Takeover
There are a variety of factors which could discourage other
persons from attempting to acquire the Company. 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 affect 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."
The issued and outstanding shares of the Company's preferred
stock held by RBB Bank and the Series 3 Warrants, Series 6 Warrants
and Series 10 Warrants held by RBB Bank could discourage other
persons from attempting to acquire the Company. If RBB Bank
acquires an aggregate of 5,797,583 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 47.7% of the outstanding
shares of Common Stock of the Company, which includes the 6,751,482
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 14
Preferred, Series 15 Preferred and Series 16 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 14 Preferred, Series 15 Preferred and Series 16
Preferred and exercise of the Series 3 Warrants, Series 6 Warrants
and Series 10 Warrants. In such event, RBB Bank will be the
largest single shareholder 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 Series 3 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."
THE COMPANY
Company Overview
The Company is a Delaware corporation organized in 1990. The
Company is engaged, through its subsidiaries in:
Waste Management Services, which includes:
*treatment, storage, processing, and disposal of hazardous
and non-hazardous waste and mixed waste which is both
low-level radioactive and hazardous;
*nuclear mixed and low-level radioactive waste treatment,
processing and disposal, which includes research,
development, on-and off-site waste remediation and
processing; and
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*industrial waste and wastewater management services,
including the collection, treatment, processing and
disposal, and the design and construction of on-site
wastewater treatment systems.
Consulting Engineering Services, which includes:
*broad-scope environmental issues, including environmental
management programs, regulatory permitting, compliance
and auditing, landfill design, field testing and
characterization.
The Company services research institutions, commercial
companies and governmental agencies nationwide. The distribution
channels for services are through direct sales to customers or via
intermediaries.
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 of Ft. Lauderdale, Inc. ("PFFL") located in
Davie, Florida;
* Perma-Fix of New Mexico, Inc. ("PFNM") located in
Albuquerque, New Mexico;
* Chemical Conservation Corporation ("Chemical Florida")
located in Orlando, Florida;
* Chemical Conservation of Georgia, Inc. ("Chemical
Georgia") located in Valdosta, Georgia; and
* Chem-Met Services, Inc. ("Chem-Met") located in Detroit,
Michigan.
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.
Acquisition of Chemical Conservation Corporation,
Chemical Conservation of Georgia, Inc. and Chem-Met Services, Inc.
On May 27, 1999, (i) the Company, Chemical Florida, Chemical
Georgia, The Thomas P. Sullivan Living Trust, dated September 6,
1978 ("TPS Trust"); The Ann L. Sullivan Living Trust, dated
September 6, 1978 ("ALS Trust"); Thomas P. Sullivan, an individual
("TPS"); and Ann L. Sullivan, an individual ("ALS"), entered into
a Stock Purchase Agreement ("Chem-Con Stock Purchase Agreement"),
pursuant to which the Company purchased all of the outstanding
capital stock of Chemical Florida and Chemical Georgia from the ALS
Trust pursuant to the terms of the Chem-Con Stock Purchase
Agreement, and (ii) the Company, Chem-Met, the TPS Trust, the ALS
Trust, TPS and ALS entered into a Stock Purchase Agreement ("Chem-
Met Stock Purchase Agreement"), pursuant to which the Company
purchased all of the outstanding capital stock of Chem-Met from the
TPS Trust pursuant to the terms of the Chem-Met Stock Purchase
Agreement. The Chem-Con Stock Purchase Agreement and the Chem-Met
Stock Purchase Agreement are collectively referred to as the "Stock
Purchase Agreements." TPS and ALS are husband and wife.
Under the terms of the Stock Purchase Agreements, the purchase
price paid by the Company in connection with the acquisition of
Chemical Florida, Chemical Georgia and Chem-Met was $8,700,000,
consisting of (i) $1,000,000 in cash paid at closing, (ii) three
promissory notes ("Promissory Notes"), in the aggregate amount of
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$4,700,000, to be paid in equal monthly installments of principal
and interest of approximately $90,276.96 over five years and having
an interest rate of 5.5% for the first three years and 7% for the
remaining two years. The payment of the Promissory Notes are
guaranteed by Chem-Met under a non-recourse guaranty. The non-
recourse guaranty is secured by certain real estate owned by
Chem-Met, and (iii) $3,000,000 paid in the form of 1,500,000 shares
of Common Stock, paid to the ALS Trust at closing; however, if the
ALS Trust owns any of such shares of Common Stock at the end of
eighteen (18) months from the June 1, 1999, closing date (the
"Guarantee Period") and the market value (as determined below) per
share of Common Stock at the end of the Guarantee Period is less
than $2.00 per share, the Company shall pay the ALS Trust, within
ten (10) business days after the end of the Guarantee Period, an
amount equal to the sum determined by multiplying the number of
shares of Common Stock issued to the ALS Trust under the Stock
Purchase Agreements that are still owned by the ALS Trust at the
end of the Guarantee Period by $2.00 less the market value (as
determined below) of such shares of Common Stock owned by the ALS
Trust at the end of the Guarantee Period, with such amount, if any,
payable by the Company to the ALS Trust, at the Company's option,
in cash or in Common Stock or a combination thereof.
Notwithstanding anything to the contrary, the aggregate number of
shares of Common Stock issued or issuable under the Stock Purchase
Agreements for any reason whatsoever shall not exceed eighteen
percent (18%) of the number of issued and outstanding shares of
Common Stock on the date immediately preceding the June 1, 1999,
closing date. The market value of each share of Common Stock at
the end of the Guarantee Period shall be determined based on the
average of the closing sale price per share of Common Stock as
reported on the NASDAQ for the five (5) consecutive trading days
ending with the trading day immediately prior to the end of the
Guarantee Period. Under the Company's loan agreement, the Company
may only pay such amount due the ALS Trust at the end of the
Guarantee Period in Common Stock unless the Company's lender agrees
that the Company may satisfy all or part of such in cash. Issuance
of the shares of Common Stock in connection with the Stock Purchase
Agreements was exempt from registration under Section 4(2) of the
Securities Act and/or Regulation D promulgated under the Securities
Act.
Under the terms of the Stock Purchase Agreements, the ALS
Trust and the TPS Trust have the right to select one nominee to the
Board of Directors of the Company under certain limited conditions.
In connection with the closing of the Stock Purchase Agreements, a
new seat was created on the Board of Directors of the Company and
TPS was appointed to fill such vacant seat.
The cash portion of the purchase price for the acquisition of
Chemical Florida, Chemical Georgia and Chem-Met was obtained
through borrowing under the Company's credit facility. The Company
anticipates that the Promissory Notes will be paid with working
capital generated from operations and/or borrowing under the
Company's revolving credit facility with Congress. In connection
with the closing, using funds borrowed by the Company under the
Company's credit facility, the Company also paid an aggregate of
approximately $3,842,560 to satisfy certain obligations of
Chem-Met.
Potential Environmental Liability and Certain Environmental
Expenditures
In May 1995, Perma-Fix of Memphis, Inc. ("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,
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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 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. PFM and certain other
PRPs entered into a Consent Decree with the federal government,
whereby PFM has agreed to pay $225,000 ($150,000 payable at closing
and the balance payable over a twelve month period) in settlement
of the claims that the EPA has against PFM in connection with the
Drum Site. The court has approved the Consent Decree, and PFM has
paid the first installment of $150,000.
For 1999, the Company budgeted capital expenditures of
approximately $2,500,000 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 treatment, storage and disposal
facilities ("TSD Facilities")and $437,000 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 $383,000 as of December 31, 1998.
The Company has accrued approximately $460,000 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.
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 $910,000 over the next five to ten years to remediate
the prior contamination.
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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 in January 1997
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.
Certain properties owned and operated by Chemical Georgia and
Chem-Met were previously determined to have environmental
contamination, and remediation efforts at such facilities have been
ongoing for a number of years. Therefore, the Company has accrued
certain estimated remediation costs in connection with its
acquisition of the regulated facilities of Chemical Georgia and
Chem-Met, which costs were determined pursuant to RCRA guidelines.
The Company has recognized long-term environmental accruals
totaling $4,319,000. This amount represents the Company's best
estimate of the long-term costs to remove contaminated soil and to
undergo groundwater remediation activities at Chemical Georgia's
facility located in Valdosta, Georgia, and Chem-Met's facility
located in Detroit, Michigan. This estimate is based on a
remediation model which incorporates numerous assumptions,
including certain assumptions which have been provided to the
Company by third-parties. If one or more of these assumptions
turns out to be inaccurate, or there is substantially more
contamination than currently anticipated, actual remediation costs
for the Company could be substantially different from the Company's
current best estimates and the costs could substantially exceed the
amount accrued in connection with such remediation. Both
facilities have pursued remedial activities for the last five years
with additional studies forthcoming and potential groundwater
restoration could extend for a period of ten years. No insurance
or third party recovery was taken into account in determining the
Company's cost estimates or reserve, nor do such cost estimate or
reserve reflect any discount for present value purposes. There can
be no assurance that the Company's estimates regarding the costs of
remediation efforts at the regulated facilities of Chemical Georgia
and Chem-Met are accurate or that the anticipated remediation
expenditures will prove to be sufficient to complete remediation at
such facilities. An increase in the Company's costs of remediation
at the regulated facilities of Chemical Georgia and Chem-Met could
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 $10 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. Chemical
Florida, Chemical Georgia and Chem-Met currently maintain separate
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policies ("Chemical Policies") which were in place prior to their
acquisition by the Company and expire on December 31, 1999. At the
time of the expiration of these policies, the Company anticipates
consolidating the insurance for Chemical Florida, Chemical Georgia
and Chem-Met into the Company's policies. The Chemical Policies
include general liability coverage of $1 million per occurrence,
with $2 million in the aggregate plus an additional $5 million
excess umbrella coverage and environmental impairment liability
insurance of $1 million per occurrence and $2.5 million in the
aggregate. The cost of the Company's insurance is substantial and
is expected to increase. See "Risk Factors--Adequacy of 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
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 is, as
of the date of this Prospectus, remediating two sites on which it
operates RCRA permitted treatment and storage facilities that
became contaminated prior to being acquired by the Company in 1999.
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
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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 Waste Management Companies are 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, processing, disposal
and transportation of hazardous, non-hazardous and radioactive
wastes, and require us to obtain and maintain permits, licenses
and/or approvals in order to conduct certain of the Company's waste
activities. Failure to obtain and maintain our permits or
approvals would have a material adverse effect on the Company, its
operations and financial condition. Moreover, as the Company
expands its operations it may be required to obtain additional
approvals, licenses or permits, and there can be no assurance that
it will be able to do so.
PFTS is a permitted hazardous waste treatment and storage
facility and a permitted solid waste underground injection well
facility. Additionally PFTS maintains an active Injection Facility
Operations Permit for our two waste disposal injection wells, and
a Pre-Treatment permit in order to discharge industrial wastewaters
to the City of Tulsa's Publically Owned Treatment Works. PFTS is
also registered as a hazardous waste transporter.
PFF operates its hazardous and low-level radioactive waste
activities under a hazardous waste permit and a low level
radioactive material license issued by the state of Florida.
PFL operates under a general permit and use oil processors
license issued by the State of Florida and a transporter license
issued by the State of Florida and a transfer facility license
issued by Broward County, Florida. Broward County also issued PFL
a discharge pretreatment permit that allows discharge of treated
water to the Broward County Publically Owned Treatment Works.
PFD operates a hazardous and non-hazardous waste treatment and
storage facility under various permits. PFD provides wastewater
pretreatment under a discharge permit with Montgomery County
Publically Owned Treatment Works and is a specification and off-
specification used oil processor under guidelines of the Ohio EPA.
Chemical Florida operates a permitted hazardous waste
treatment and storage facility and operates a transfer station that
serves as the base for licensed transporters of hazardous waste.
Chemical Georgia operates a permitted hazardous waste and
solvent recycling facility.
Chem-Met operates an inorganic waste treatment and
stabilization facility under various permits and it maintains a
government services division which focuses on the Defense
Revitalization and Marketing Services segment. Chem-Met is
currently operating its hazardous waste treatment and storage
facility under interim status pursuant to a Consent Judgment with
the State of Michigan.
The Company believes that its TSDs presently have obtained
all approvals, licenses and permits necessary to enable them to
conduct business as they are presently conducted. The failure of
the Company's TSDs 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.
The Company believes that its on-site waste treatment services
do not require federal environmental permits provided certain
conditions are met, and it has received written verification from
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each state in which it is presently operating that no such permit
is required provided certain conditions are met. There can be no
assurance that states in which the Company's waste facilities
presently do business, other states in which the Company's waste
facilities may do business in the future, or the federal government
will not change policies or regulations requiring the Company to
obtain permits to carry 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. These gross margins may be reduced further due to
several factors: (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
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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.
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 Carry Forwards
The Company anticipates that its cash flow in future years
will benefit from its ability to utilize net operating loss ("NOL")
carry forwards from prior periods. The NOL carry forwards 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 1998, the Company estimates
that it has on a consolidated basis available NOL carry forwards of
approximately $10.8 million for federal income tax purposes. These
NOL carry forwards will expire to the extent not utilized by the
years 2006 through 2012. See "Risk Factors--Loss Carry Forwards."
The amount of NOL carry forwards has not been audited or
approved by the IRS and no assurance can be given that such carry
forwards will not be reduced as a result of future audits. In
addition, the ability of the Company to utilize these carry
forwards 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 carry forwards 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
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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 $4,800,000 of the approximate $10.8
million in NOL carry forwards based upon the Company's federal
income tax returns as filed with the IRS for taxable years through
1998, 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 1998, approximately $1,500,000 of the approximate $10.8
million in 382 Limitations is no longer limited, and after five
years, all of the approximate $10.8 million in NOL carry forwards
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.
Liquidity
During fiscal year 1997, 1998 and 1999 there were numerous
events, many of which were precipitated by the Company, which
served to increase the Company's liquidity on a short term and long
term basis. During 1997, the Company and certain of its
subsidiaries (i) sold non productive assets in the amount of
$245,075, (ii) entered into and received business interruption
insurance proceeds for the Ft. Lauderdale facility in the amount of
$231,235, (iii) received $943,464 from the issuance of Common Stock
upon the exercise of certain options and warrants, (iv) issued the
Series 4 Preferred for an aggregate sales price of $2,500,000, (v)
issued the Series 5 Preferred for an aggregate sales price of
$350,000, (vi) received insurance proceeds of $497,000 as a result
of the fire and explosion at PFM; and (vii) issued $410,295 of
Common Stock for outstanding obligations including preferred stock
dividends and payment of services.
During 1998, the Company entered into the Loan Agreement with
Congress Financial Corporation (Florida) ("Congress"), pursuant to
which (i) the previous loan arrangements with Heller Financial
Corporation and Ally Capital Corporation were replaced, (ii) the
then existing loan covenant violations of the Company under such
arrangements were eliminated, and (iii) the Company received
increased lending availability. The Company also received
insurance proceeds related to the fire and explosion at PFM in the
amount of $1,475,000, issued the Series 10 Preferred for an
aggregate sales price of $3,000,000, received $288,367 from the
issuance of Common Stock upon the exercise of certain options and
warrants and proceeds from a stock purchase plan, and issued
$599,813 of Common Stock for outstanding obligations, including
preferred stock dividends and payment of services.
During 1999, in connection with the acquisition of Chemical
Florida, Chemical Georgia and Chem-Met, on May 27, 1999, Congress,
the Company, and the Company's subsidiaries, including Chemical
Florida, Chemical Georgia and Chem-Met (which, when acquired by the
Company, would be wholly owned subsidiaries of the Company) entered
into an Amendment and Joinder to Loan and Security Agreement (the
"Loan Amendment") dated May 27, 1999, pursuant to which the Loan
and Security Agreement ("Original Loan Agreement") among Congress,
the Company and the Company's subsidiaries was amended to provide,
among other things, (i) the credit line was increased from
$7,000,000 to $11,000,000, with the revolving line of credit
portion being determined as the maximum credit of $11,000,000 but
less the term loan balance, with the exact amount that can be
borrowed under the revolving line of credit not to exceed eighty
percent (80%) of the Net Amount of Eligible Accounts (as defined in
the Original Loan Agreement) less certain reserves; (ii) the term
loan portion of the Original Loan Agreement was increased from its
then current balance of approximately $1,600,000 to $3,750,000 and
it shall be subject to a four year amortization schedule payable
over three years at an interest rate of 1.75% over prime; (iii) the
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term of the Original Loan Agreement, as amended, was extended for
three years from the date of the acquisition, subject to earlier
termination pursuant to the terms of the Original Loan Agreement,
as amended; (iv) Chemical Florida, Chemical Georgia and Chem-Met
were added as co-borrowers under the Original Loan Agreement, as
amended; (v) the interest rate on the revolving line of credit
continued at 1.75% over prime, with a rate adjustment to 1.5% if
1999 or 2000 net income applicable to Common Stock of the Company
is equal to or greater than $1,500,000 for either fiscal year ended
December 31, 1999 or 2000; (vi) the monthly service fee was
increased from $1,700 to $2,000; (vii) government receivables will
be limited to 20% of eligible accounts receivable; and (viii)
certain obligations of Chem-Met shall be paid at closing of the
acquisition of Chem-Con and Chem-Met.
The cash portion of the purchase price for Chemical Florida,
Chemical Georgia and Chem-Met was obtained through borrowing by the
Company under its credit facility. The Company anticipates that
the Promissory Notes issued as part of the purchase price for
Chemical Florida, Chemical Georgia and Chem-Met will be paid with
working capital generated from operations and/or borrowing under
the Company's revolving credit facility with Congress. At the
closing, using funds borrowed by the Company under its credit
facility. The Company also paid an aggregate of approximately
$3,843,000 to satisfy certain obligations of Chem-Met.
As of June 30, 1999, borrowings under the revolving loan
agreement were approximately $3,642,000, an increase of $3,545,000
over the December 31, 1998, balance of $97,000. This increase
represents $2,799,000 borrowed to complete the acquisition of
Chemical Florida, Chemical Georgia and Chem-Met on June 1, 1999,
and $746,000 for general working capital needs which is typical
during increased revenue periods. The Company funded through the
revolving and term loan a total of $4,882,000 pursuant to the
Company's acquisition of Chemical Florida, Chemical Georgia and
Chem-Met, excluding legal, professional and other closing fees, of
which $2,651,000 represented the repayment of certain debt
obligations, $1,192,000 represented payment of certain settlement
obligations and $1,000,000 of the cash consideration paid to the
former owners of Chemical Florida, Chemical Georgia and Chem-Met.
As of June 30, 1999, the Company's borrowing availability under the
Company's revolving credit facility, based on its then outstanding
eligible accounts receivable, was approximately $3,062,000. The
Company also had at June 30, 1999, approximately $486,000 in cash
and cash equivalents.
Recent Developments
During October 1999, the Company completed the development of
a new treatment technology designed to treat certain selenium
contaminated materials and waste (the "Selenium Process").
Selenium is a hazardous and highly toxic element that is present in
a variety of industrial waste materials. The Selenium Process for
treatment of selenium waste is a water-based chemical treatment
process that operates at room temperature in an enclosed reactor.
The Company has filed a patent application with the U.S. Patent and
Trademark Office covering the Selenium Process. As of the date of
this report, the Company has not received a patent for the Selenium
Process, and there are no assurances that such a patent will be
issued. Until development of the Selenium Process, the Company was
not aware of a relatively simple process that would detoxify waste
containing selenium to meet EPA standards. The Company believes,
based upon laboratory testing, that the Selenium Process is
effective on a variety of selenium contaminated waste streams and
is capable of processing such waste streams to meet currently
applicable EPA standards. To date, however, the Company has not
used the Selenium Process in a commercial operation, and,
therefore, it is not known whether the Company will be able to
utilize the Selenium Process in a commercial operation or to
incorporate the Selenium Process into the Company's waste treatment
operations, or, if the Company is able to utilize the Selenium
Process, whether it will be able to do so on a profitable basis.
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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 (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. Dionysus has exercised the
Dionysus Warrant as to 51,800 shares of Common Stock, leaving
48,200 shares of Common Stock remaining which may be purchased upon
exercise of the Dionysus Warrant.
RBB Series 4 Exchange Agreement
Pursuant to the Exchange Agreement, dated November 6, 1997,
but effective as of September 16, 1997 (the "RBB Series 4 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 was eliminated from and after
September 6, 1998.
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
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.
RBB Series 6 Exchange Agreement
Pursuant to the Exchange Agreement, dated April 30, 1998, but
to be considered effective as of February 28, 1998 (the "RBB Series
6 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. The Series 6
Warrants were not affected by the RBB Series 6 Exchange Agreement.
The Company paid to RBB Bank the dividends on the Series 6
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Preferred which accrued from the date of issuance through
February 28, 1998, the effective date of the RBB Series 6 Exchange
Agreement, by issuing to RBB Bank 20,864 shares of Common Stock,
which shares of Common Stock are covered by this Prospectus.
The rights of the Series 8 Preferred were the same as the
rights under the Series 6 Preferred, except for the conversion
price. The Series 8 Preferred was 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 was 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 was to
be not less than a minimum of $.75 per share, which minimum has
been eliminated from and after September 6, 1998. See "--RBB
Series 4 Exchange Agreement." Because there is no minimum conversion
price, the number of shares of Common Stock which were issuable
pursuant to conversion of the Series 8 Preferred increased the
further the closing bid price of the Common Stock goes below $2.265
per share. The more the closing bid price fell below $2.265, the
more shares of Common Stock were issuable upon conversion of the
Series 8 Preferred. See "Risk Factors--Potential Adverse Effects
of Floating-Price Convertible Preferred Stock."
The Series 8 Preferred was not entitled to any voting rights,
except as required by law. The Series 8 Preferred had 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 accrued
dividends on a cumulative basis at a rate of 4% per annum of the
Liquidation Value ("Series 8 Dividend Rate"), and was payable semi-
annually when and as declared by the Board of Directors. No
dividends or other distributions could 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 were paid
or set aside for payment. Dividends could 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
paid dividends in Common Stock, such were 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 has issued 63,044 shares of Common Stock in payment of
dividends that have accrued on the Series 8 Preferred through July
15, 1999, the date on which the Series 8 Preferred was exchanged
for the Series 12 Preferred.
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 $2,653,000 from this private placement,
after the deduction for certain commissions and expenses incurred
by the Company.
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The Series 10 Preferred had 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 accrued dividends on a
cumulative basis at a rate of four percent (4%) per annum of the
Series 10 Liquidation Value ("Series 10 Dividend Rate"), and was
payable semi-annually within ten (10) business days after each
subsequent June 30 and December 31 (each a "Dividend Declaration
Date"), and was 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 was December 31, 1998. No dividends or
other distributions were to 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 were
paid or set aside for payment. Dividends could be paid, at the
option of the Company, in the form of cash or Common Stock of the
Company. If the Company paid dividends in Common Stock, such were
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 was declared, times (b)
a fraction, the numerator of which is the number of days elapsed
during the period for which the dividend was to be paid and the
denominator of which is 365.
The conversion price per outstanding share of Series 10
Preferred ("Series 10 Conversion Price") was $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")
was less than $2.34, then the Conversion Price for that particular
conversion was to 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. Because there was no minimum conversion
price, the number of shares of Common Stock which were issuable
pursuant to conversion of the Series 10 Preferred could increase
the further the closing bid price of the Common Stock goes below
$2.34 per share. The more the closing bid price falls below $2.34,
the more shares of Common Stock were issuable upon conversion of
the Series 10 Preferred. See "Risk Factors--Potential Adverse
Effects of Floating-Price Convertible Preferred Stock."
Pursuant to the terms of the Series 10 Preferred, in the case
of (a) any consolidation or merger to which the Company was a
party, other than a merger or consolidation in which the Company
was 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 were
outstanding and prior to the effectiveness of the Registration
Statement covering the Common Stock issuable upon conversion of the
Series 10 Preferred, the Company was to provide for the holder of
the Series 10 Preferred 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 was not
the survivor, the holder of the Series 10 Preferred had 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 was to 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.
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Under the terms of the Series 10 Preferred, if the Company
declared or paid, while any Series 10 Preferred remained
outstanding, any dividend on the Common Stock payable in Common
Stock, or effected 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 were 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 Series 10 Conversion Price were to be
adjusted appropriately.
If the Common Stock issuable upon conversion of the Series 10
Preferred were 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 were, concurrently with the effectiveness of
such reorganization or reclassification, to be proportionately
adjusted so that the Series 10 Preferred would 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
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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
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.
In March, 1999, the Company entered into an Exchange Agreement
("Liviakis Exchange Agreement") dated March 14, 1999, with Liviakis
and Prag whereby the Liviakis Warrant and the Prag Warrant were
canceled and exchanged for 200,000 shares of Common Stock, 150,000
of which were issued to Liviakis and 50,000 of which were issued to
Prag pursuant to an exemption from registration under Section
3(a)(9) and/or Section 4(2) of the Securities Act. Pursuant to the
terms of the Liviakis Exchange Agreement the Company agreed to
register the shares of Common Stock issued to Liviakis and Prag
thereunder.
July 1999 Exchange Agreements
On July 15, 1999, the Company and RBB Bank entered into (i) an
Exchange Agreement, dated July 15, 1999 ("Series 8 Exchange
Agreement"), pursuant to which the 916 outstanding shares of Series
8 Preferred, all of which were held by RBB Bank, were exchanged for
an equal number of shares of newly created Series 12 Class L
Convertible Preferred Stock, par value $.001 per share ("Series 12
Preferred"); and (ii) an Exchange Agreement, dated July 15, 1999
("Series 10 Exchange Agreement"), pursuant to which the 2,252
outstanding shares of Series 10 Preferred Stock, all of which were
held by RBB Bank, were exchanged for an equal number of shares of
newly created Series 13 Class M Convertible Preferred Stock, par
value $.001 per share ("Series 13 Preferred").
The issuances of the Series 12 Preferred and Series 13
Preferred to RBB Bank were made in private placements under Section
4(2) of the Securities Act and/or pursuant to an exemption from
registration under Section 3(a)(9) of the Securities Act. The
terms of the newly issued securities are substantially the same as
the series for which each was exchanged with the exception of
certain differences as described below.
Redemption Terms of Series 8 Preferred and Series 12 Preferred
The Series 8 Preferred was redeemable by the Company (a)
within four (4) years from June 9, 1997 at $1,300 per share when
the average of the closing bid price of the Common Stock for ten
(10) consecutive days is in excess of $4.00 per share as quoted on
the NASDAQ and (b) at $1,000 per share after four years from June
9, 1997. The Company had to provide thirty (30) days notice to the
Series 8 Preferred holder prior to any date stipulated by the
Company for redemption and at such time, the Series 8 Preferred
holder had the option of converting the shares which are to be
redeemed.
Under the terms of the Series 12 Preferred, the Company was
permitted to redeem up to 300 shares of Series 12 Preferred for
$1,000 per share, or an aggregate of $300,000, provided that any
such redemption had to occur within 150 days of issuance of the
Series 12 Preferred. On July 15, 1999, the Company redeemed 300
shares of Series 12 Preferred leaving 616 shares of Series 12
Preferred issued and outstanding.
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Redemption Terms of Series 10 Preferred and Series 13 Preferred
The Series 10 was not redeemable by the Company. Under the
terms of the Series 13 Preferred, the Company was permitted to
redeem up to 450 shares of Series 13 Preferred for $1,000 per
share, or an aggregate of $450,000, provided that any such
redemption had to occur within 150 days of issuance of the Series
13 Preferred. On July 15, 1999, the Company redeemed 450 shares of
Series 13 Preferred leaving 1,802 shares of Series 13 Preferred
issued and outstanding.
Other Differences
In addition to the different redemption terms for the Series
12 Preferred and the Series 13 Preferred described above, the
Series 12 Preferred and Series 13 Preferred (together, the "July
1999 Exchange Preferred") each contain provisions, described
hereafter, which are different from those provisions in the Series
8 Preferred and Series 10 Preferred, as applicable.
* RBB Bank could make no conversions of the July 1999
Exchange Preferred for 12 months from July 15, 1999.
* The July 1999 Exchange Preferred had a minimum conversion
price of $1.50 per share for a 24 month period from
July 15, 1999.
* Except for the 750 shares described above which were
redeemed at $1,000 per share on July 15, 1999, for 12
months from July 15, 1999, the Company could redeem at
any time and from time to time any of the July 1999
Exchange Preferred held by RBB Bank at 110% of its
"stated value" of $1,000 per share. Thereafter, the
Company could redeem at any time and from time to time
any of such July 1999 Exchange Preferred at 120% of its
"stated value" of $1,000 per share. After 12 months from
July 15, 1999, upon any notice of redemption, RBB had
only 5 business days to exercise its conversion rights
regarding the redeemed shares. For 12 months from
July 15, 1999, RBB Bank could not elect to convert shares
of July 1999 Exchange Preferred even if the Company
redeemed such shares of July 1999 Exchange Preferred.
August 1999 Exchange Agreements
On August 3, 1999, the Company and RBB Bank entered into (i)
an Exchange Agreement, dated August 3, 1999 ("Series 12 Exchange
Agreement"), pursuant to which the 616 outstanding shares of Series
12 Preferred, all of which were held by RBB Bank, were exchanged
for an equal number of shares of newly created Series 15 Class O
Convertible Preferred Stock, par value $.001 per share ("Series 15
Preferred"); and (ii) an Exchange Agreement, dated August 3, 1999
("Series 13 Exchange Agreement"), pursuant to which the 1,802
outstanding shares of Series 13 Preferred Stock, all of which were
held by RBB Bank, were exchanged for an equal number of shares of
newly created Series 16 Class P Convertible Preferred Stock, par
value $.001 per share ("Series 16 Preferred"). The Series 12
Exchange Agreement and Series 13 Exchange Agreement terminated all
previous subscription and exchange agreements regarding the Series
8 Preferred, Series 10 Preferred, Series 12 Preferred and Series 13
Preferred.
The issuances of the Series 15 Preferred and Series 16
Preferred (collectively, the "August 1999 Exchange Preferred") to
RBB Bank were made in private placements under Section 4(2) of the
Securities Act and/or pursuant to an exemption from registration
under Section 3(a)(9) of the Securities Act. The terms of each of
the August 1999 Exchange Preferred are substantially identical to
the particular July 1999 Exchange Preferred for which each was
exchanged except that the July 15 dates as described above in
connection with the July 1999 Exchange Preferred were changed to
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<PAGE>
April 20 and certain registration rights were granted regarding the
shares of Common Stock issuable under the August 1999 Exchange
Preferred. Therefore, (i) RBB Bank may make no conversions of the
August 1999 Exchange Preferred for 12 months from April 20, 1999,
even regarding shares redeemed by the Company; (ii) each of the
August 1999 Exchange Preferred has a minimum conversion price of
$1.50 per share for a 24 month period from April 20, 1999; (iii)
for 12 months from April 20, 1999, the Company may redeem at any
time and from time to time any of the August 1999 Exchange
Preferred held by RBB Bank at 110% of its "stated value" of $1,000
per share; and (iv) if the Company does not register with the
Commission certain shares of the Common Stock issuable upon
conversion of the August 1999 Exchange Preferred by January 31,
2000, the Company agrees to pay to RBB Bank a penalty in an amount
equal to two percent (2%) of the product of (a) the number of
shares of such convertible preferred stock then outstanding times
(b) $1,000, payable in cash. The Company further agreed that for
each month thereafter which terminates without such registration
statement being declared effective by the Commission before the end
of the last day thereof, the Company shall pay to RBB Bank a
penalty in an amount equal to two percent (2%) of the product of
(a) the number of shares of convertible preferred stock then
outstanding times (b) $1,000, payable in cash. After April 20,
2000, the Company may redeem at any time and from time to time any
of such August 1999 Exchange Preferred at 120% of its "stated
value" of $1,000 per share and, upon any notice of redemption, RBB
shall have 5 business days to exercise its conversion rights
regarding the redeemed shares. During the 12 months after April
20, 1999, RBB Bank cannot elect to convert shares of August 1999
Exchange Preferred even if the Company redeems such shares of
August 1999 Exchange Preferred. As of the date of this Prospectus,
RBB Bank owns of record 6,751,482 shares of Common Stock, or
approximately 33.0% of the outstanding shares of Common Stock.
Prior to April 20, 2000, the Series 14 Preferred, Series 15
Preferred and Series 16 Preferred are not convertible into Common
Stock. During such time period, RBB Bank has the right to acquire
an aggregate of approximately 3,006,250 additional shares of Common
Stock upon the exercise of the Series 3 Warrants, Series 6 Warrants
and Series 10 Warrants. Based on the assumptions noted below, upon
such exercise as described in this paragraph, RBB Bank would own
approximately 9,757,732 shares of Common Stock or approximately
41.5% of the outstanding shares of Common Stock of the Company,
which includes the 6,751,482 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 14 Preferred, Series 15 Preferred and
Series 16 Preferred.
From April 20, 2000, until April 20, 2001, the Series 14
Preferred, Series 15 Preferred and Series 16 Preferred have a
minimum conversion price of $1.50 per share. During such time
period, RBB Bank has the right to acquire an aggregate of
approximately 5,797,583 additional shares of Common Stock
consisting of (i) 1,179,333 shares upon conversion of the issued
and outstanding Series 14 Preferred, which has a fixed conversion
price of $1.50 per share during such period; (ii) 410,667 shares
upon conversion of the issued and outstanding Series 15 Preferred,
which has a minimum conversion price of $1.50 during such period ;
(iii) 1,201,333 shares upon conversion of the issued and
outstanding Series 16 Preferred, which has a minimum conversion
price of $1.50 during such period; and (iv) 3,006,250 shares upon
the exercise of the Series 3 Warrants, Series 6 Warrants and Series
10 Warrants. Based on the assumptions noted below, upon such
conversion and exercise as described in this paragraph, RBB Bank
would own approximately 12,549,065 shares of Common Stock or
approximately 47.7% of the outstanding shares of Common Stock of
the Company, which includes the 6,751,482 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 14 Preferred, Series 15
Preferred and Series 16 Preferred.
After April 20, 2001, RBB Bank has the right to acquire
approximately 6,123,622 additional shares of Common Stock
consisting of (i) 1,640,850 shares upon conversion of the issued
and outstanding Series 14 Preferred, which has a minimum conversion
price of $.50 per share during such period, subject to change under
certain limited circumstances; (ii) 535,652 shares upon conversion
of the issued and outstanding Series 15 Preferred, which has no
minimum conversion price after April 20, 2001; (iii) 940,870 shares
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upon conversion of the issued and outstanding Series 16 Preferred,
which has no minimum conversion price after April 20, 2001; and
(iv) 3,006,250 shares upon the exercise of the Series 3 Warrants,
Series 6 Warrants and Series 10 Warrants. The foregoing estimates
are made assuming that the average of the closing bid quotations for
the Common Stock for the five trading days immediately preceding
each conversion date equals $1.4375 per share (which was the
closing price of the Common Stock on October 13, 1999). Upon
such conversion and exercise as described in this paragraph, RBB
Bank would own approximately 12,875,104 shares of Common Stock or
approximately 48.4% of the outstanding shares of Common Stock of
the Company, which includes the 6,751,482 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 14 Preferred, Series 15
Preferred and Series 16 Preferred.
The foregoing figures regarding the number of shares issuable
to RBB Bank under certain circumstances are only estimates which
are based upon certain assumptions. The associated figures
regarding potential percentage ownership of the Common Stock of the
Company which RBB Bank could obtain are made assuming 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 14 Preferred, Series
15 Preferred and Series 16 Preferred), no other warrants or options
are exercised (other than the Series 3 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.
If the average closing bid price of the Common Stock is less
than $1.4375 per share for the five trading days immediately
preceding the time of conversion, then the maximum number of shares
of Common Stock which could be issued to RBB Bank as a result of
conversion of such convertible preferred stock could be
substantially increased from the number of shares of Common Stock
described above. See "Risk Factors--Potential Adverse Effects of
Floating-Price Convertible Preferred Stock."
If, as an example, after April 20, 2001, RBB Bank were to
convert all of its preferred stock of the Company that are
outstanding as of the date of this Prospectus when the average
closing bid price per share of Common Stock for the five trading
days prior to RBB Bank's conversion were $0.25, the Series 14
Preferred, Series 15 Preferred and Series 16 Preferred would be
convertible into approximately 15,628,000 shares of Common Stock.
If RBB Bank were to also exercise all of its Series 3 Warrants,
Series 6 Warrants and Series 10 Warrants, it would own 25,385,732
shares of Common Stock representing approximately 64.9% of the then
outstanding shares of Common Stock of the Company, including the
6,751,482 shares of Common Stock held of record by RBB Bank as of
the date of this Prospectus. The foregoing assumes 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 14 Preferred, Series 15
Preferred and Series 16 Preferred or the payment of accrued
dividends on the outstanding shares of Series 9 Preferred, Series
14, Preferred, Series 15 Preferred and Series 16 Preferred), no
other warrants or options are exercised (other than the Series 3
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.
Regardless of the price of the Common Stock at the time of
RBB's conversion of all of its preferred stock, upon such
conversion RBB Bank would most likely 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. See "--Private Placements and Exchange
Agreements." See "Risk Factors--Voting Control; Ability to Direct
Management, and Potential Adverse Effects of Floating-Price
Convertible Preferred Stock."
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Infinity Private Placement
On July 14, 1997, the Company issued to Infinity 350 shares of
newly-created Series 5 Class E Convertible Preferred Stock (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
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 $2.265 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 has been 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 193,103 and 304,348 shares of Common
Stock based on a closing bid price of $1.4375, which is the
closing price of the Common Stock as of October 13, 1999. The
Company is registering 310,000 shares of Common Stock to be
issuable upon conversion of the Series 9 Preferred.
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
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<PAGE>
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
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 $2.265, 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 was
eliminated from and after September 6, 1998. See "--First Infinity
Exchange Agreement." Because there is no minimum conversion price,
the number of shares of Common Stock which may be issuable pursuant
to conversion of the Series 9 Preferred will increase the further
the closing bid price of the Common Stock goes below $2.265 per
share. The more the closing bid price falls below $2.265, the more
shares of Common Stock are issuable upon conversion of the Series
9 Preferred. See "Risk Factors--Potential Adverse Effects of
Floating-Price Convertible Preferred Stock" and "Potential Adverse Effects
on Price of Common Stock Due to Conversion of Convertible Preferred
Stock; Potential Dilution."
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<PAGE>
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
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.
USE OF PROCEEDS
The Company will not receive any part of the proceeds of the
sale of Shares. The Company will receive approximately $5,188,907
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.
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.
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<PAGE>
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 8,291,072 Shares covered by this Prospectus are comprised
of the following: (a) 2,057,143 shares of Common Stock issued by
the Company upon the conversion of 1,584 shares of Series 8
Preferred; (b) 410,667 shares of Common Stock issuable by the
Company upon the conversion of the 616 shares of Series 15
Preferred based upon the $1.50 minimum conversion price of the
Series 15 Preferred until April 20, 2001; (c) 147,353 shares of
Common Stock which have been or may be issued by the Company in
payment of dividends accrued on the Series 15 Preferred (which was
exchanged for the Series 12 Preferred), the Series 12 Preferred (
which was exchanged for the Series 8 Preferred), the Series 8
Preferred (which was exchanged for the Series 6 Preferred), the
Series 6 Preferred (which was exchanged for the Series 4
Preferred), and the Series 4 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) 971,429 shares of Common
Stock issued by the Company upon the conversion of 748 shares of
Series 10 Preferred; (f) 1,201,333 shares of Common Stock issuable
by the Company upon the conversion of 1,802 shares of Series 16
Preferred remaining issued and outstanding based upon the $1.50
minimum conversion price of the Series 15 Preferred until April 20,
2001; (g) 208,757 shares of Common Stock which have been or may be
issued by the Company in payment of dividends accrued on the Series
16 Preferred (which was exchanged for the Series 13 Preferred), the
Series 13 Preferred (which was exchanged for the Series 10
Preferred), and the Series 10 Preferred; (h) 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; (i) 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; (j) 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; (k) 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;
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<PAGE>
(l) 310,000 shares of Common Stock issuable by the Company upon the
conversion of 350 shares of Series 9 Preferred remaining issued and
outstanding assuming the average of the closing bid quotations for
the Common Stock for the five trading days immediately preceding
each conversion date equals $1.4375 per share, being the closing
bid price of the Common Stock on October 13, 1999, (m) 44,453
shares of Common Stock which have been or may be issued by the
Company to Infinity in payment of dividends accrued on the Series
9 Preferred (which was exchanged for the Series 7 Preferred),
Series 7 Preferred (which was exchanged for the Series 5
Preferred), and Series 5 Preferred; (n) 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; (o) 150,000 shares of Common Stock issued to
Liviakis pursuant to the Liviakis Exchange Agreement; (p) 50,000
shares of Common Stock issued to Prag pursuant to the Liviakis
Exchange Agreement; (q) 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"); (r) 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; (s) 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 (of which 51,800 shares of
Common Stock have been issued); (t) 500,000 shares of Common Stock
issuable upon the exercise of the following Service Warrants, each
dated July 23, 1997: (aa) 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 (bb) 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; and (u) 203,174 shares of Common Stock which have
been issued in connection with an Asset Purchase Agreement, 31,176
of which were issued to Evelio Acosta and 31,175 of which were
issued to Lewis R. Goodman and 140,823 of which were issued to
Hesco Sales, Inc. See "Private Placements and Exchange Agreements."
The shares of Series 15 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
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<PAGE>
Series 15 Preferred is not convertible until April 20, 2000 and
until April 20, 2001, the conversion price of the Series 15
Preferred shall not be less than a minimum of $1.50 per share. See
"Private Placements and Exchange Agreements."
If the Conversion Price Adjustment does not become effective
for any conversion of the Series 15 Preferred or Series 9
Preferred, the conversion of all of the Series 15 Preferred could
result in the issuance of up to approximately 339,862 shares of
Common Stock, and the conversion of all of the Series 9 Preferred
could result in the issuance of up to approximately 193,103 shares
of Common Stock. If the Conversion Price Adjustment is in effect
for all conversions of Series 15 Preferred and Series 9 Preferred,
the number of shares of Common Stock issuable upon the conversion
of the Series 15 Preferred and Series 9 Preferred could result in
the issuance of a larger number of 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. See "Risk Factors--Potential Adverse
Effects of Floating Price Convertible Preferred Stock." Because
after April 20, 2001, there is no minimum conversion price
regarding either the Series 15 Preferred or Series 9 Preferred, the
number of shares of Common Stock which may be issuable pursuant to
conversion of the Series 15 Preferred and Series 9 Preferred could
be substantially greater than as estimated above. The more the
closing bid price falls below $2.265, the more shares of Common
Stock are issuable upon conversion of the Series 15 Preferred and
Series 9 Preferred. See "Risk Factors--Potential Adverse Effects of
Floating-Price Convertible Preferred Stock."
The Series 16 Preferred is not convertible into Common Stock
until April 20, 2000. The Series 16 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 16
Conversion Date is less than $2.34, then the Series 16 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 16
Conversion Date. As of June 30, 1998, the closing price of Common
Stock on the NASDAQ was $1.875 per share. Notwithstanding the
foregoing, from April 20, 2000 until April 20, 2001, the conversion
price shall not be less than $1.50 per share. See "Private
Placements and Exchange Agreements." Because there is no minimum
conversion price after April 20, 2001, the further the closing bid
price falls below $2.34, the more shares of Common Stock are
issuable upon conversion of the Series 16 Preferred. See "Risk
Factors--Potential Adverse Effects of Floating-Price Convertible
Preferred Stock."
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 shareholders entitled to
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<PAGE>
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
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 Exchange Agreement, the Common
Stock issued to Liviakis and Prag pursuant to the Liviakis Exchange
Agreement is subject to certain registration rights.
The shares of Common Stock issued to Lewis R. Goodman
("Goodman"), and Evelio Acosta ("Acosta") were issued pursuant to
the terms of an Asset Purchase Agreement, by and among PFFL, Action
Environmental Corp., a Florida corporation ("Action"), Goodman, and
Acosta, dated April 1, 1998, whereby PESI issued to Action certain
shares of Common Stock, as partial consideration for the purchase
by PFFL of all or substantially all of the assets of Action.
Action has transferred 31,176 of such shares to Acosta and 31,175
of such shares to Goodman, Acosta and Goodman being the sole
shareholders of Action.
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SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
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
___________________ ___________ ________ _________ _________
<S> <C> <C> <C> <C>
RBB Bank Aktiengesellschaft(3) 12,954,785(3) 6,002,932 6,951,853 26.1%
JW Genesis Financial Corp.(4) 562,500(4) 450,000 112,500 (18)
The Infinity Fund, L.P.(5) 389,453(5) 389,453 - (18)
Karl H. Ehlert(6) 602,000(6) 350,000 252,000 1.2%
R. Keith Fetter(7) 154,500(7) 150,000 4,500 (18)
Fontenoy Investments f/k/a 450,000(8) 450,000 - (18)
Dionysus Limited(8)
Ally Capital Management(9) 20,513(9) 20,513 - (18)
D.H. Blair Investment 224,701(10) 7,000 217,701 1.1%
Banking Corp.(10)
J. Morton Davis(11) 339,701(11) 28,000 371,701 1.8%
Esther Stahler(12) 28,000(12) 28,000 - (18)
Ruki Renov(13) 7,000(13) 7,000 - (18)
Martin A. Bell(14) 5,000(14) 5,000 - (18)
Liviakis Financial 150,000(15) 150,000 - (18)
Communications, Inc.(15)
Lewis R. Goodman(16) 31,175(16) 31,175 - (18)
Evelio Acosta(16) 31,176(16) 31,176 - (18)
Hesco Sales, Inc.(16) 140,823(16) 140,823 - (18)
Robert B. Prag(17) 60,000(17) 50,000 10,000 (18)
______________________
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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 Shareholder 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 20,486,219 shares as of
October 13, 1999.
(3) Includes (a) 3,006,250 shares that RBB Bank is entitled to
receive upon exercise of all of the Series 3 Warrants, Series 6
Warrants and Series 10 Warrants; (b) 1,179,333 shares that RBB Bank
is entitled to receive upon conversion of the 1,769 shares of
Series 14 Preferred held by RBB Bank based upon a conversion price
of $1.50, which is the minimum conversion price for the Series 14
Preferred until April 20, 2001; (c) 2,057,143 shares issued to RBB
Bank upon the conversion of 1,584 shares of Series 8 Preferred; (d)
410,667 shares that RBB Bank is entitled to receive upon conversion
of the 616 shares of Series 15 Preferred (based upon a conversion
price of $1.50, which is the minimum conversion price for the
Series 15 Preferred until April 20, 2001; (e) 971,429 shares issued
to RBB Bank upon the conversion of 748 shares of Series 10
Preferred; (f) 1,201,333 shares of Common Stock that RBB Bank is
entitled to receive upon conversion of the 1,802 shares of Series
16 Preferred held by RBB Bank (g) 212,280 shares of Common Stock
that RBB Bank may receive in payment of the accrued dividends on
the Series 3 Preferred, Series 11 Preferred and Series 14
Preferred; (h) 147,353 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), Series 8 Preferred
(which has been exchanged for the Series 12 Preferred), Series 12
Preferred (which has been exchanged for the Series 15 Preferred),
and Series 15 Preferred (i) 208,757 shares that RBB Bank has
received or may receive in payment of the accrued dividends on the
Series 10 Preferred (which has been exchanged for the Series 13
Preferred), the Series 13 Preferred (which has been exchanged for
the Series 16 Preferred) and the Series 16 Preferred, and (j)
3,560,240 shares held directly by RBB Bank, excluding shares issued
which are other wise described in this Note. The Company's
Registration Statement on Form S-3, No. 333-14513, effective
October 21, 1996, and the Company's Registration Statement on Form
S-3, No. 333-87437, effective September 20, 1999, (together, the
"Registration Statements") currently cover the reoffer and resale
of up to 6,874,545 of the 12,954,785 shares noted as beneficially
owned by RBB Bank. The shares of Common Stock described as being
issuable to RBB Bank upon conversion of the Series 14 Preferred,
Series 15 Preferred and Series 16 Preferred are not issuable within
the next 60 days because such series of preferred stock are not
convertible until April 20, 2000.
(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. Genesis
is a publicly traded company whose shares of common stock are
traded on the American Stock Exchange
-47-
<PAGE>
(5) Includes (a) 310,000 shares that Infinity is entitled to
receive upon conversion of all of the Series 9 Preferred held
by Infinity, (b) 44,453 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, and (c)
35,000 shares that are issuable upon exercise of the Infinity
Warrants. The general partner of Infinity, International
Financial Research Alliance, L.L.C. ("IFRA"), has voting or
dispositive control over shares held by Infinity. The members
of IFRA are Mark Scott, Barry Pearl, and Elizabeth Scott.
(6) Includes 350,000 shares that Mr. Ehlert is entitled to receive
upon exercise of the Ehlert Warrants and 252,000 shares held
directly by Mr. Ehlert. Mr. Ehlert currently provides investor
relations, marketing, and consulting services to the Company.
(7) Includes 150,000 shares that Mr. Fetter is entitled to receive
upon exercise of the Fetter Warrants and 4,500 shares held
directly by Mr. Fetter. Mr. Fetter previously provided
investor relations, marketing, and consulting services to the
Company.
(8) Includes 350,000 shares that Fontenoy is entitled to receive
upon exercise of the Fontenoy Warrant and 100,000 shares (of
which 51,800 shares have been received) that Fontenoy is
entitled to receive upon exercise of the Dionysus Warrant.
Subsequent to receiving the Dionysus Warrant, Dionysus Limited
changed its name to Fontenoy Investments. Fontenoy currently
provides investor relations, marketing and consulting services
to the Company. The beneficial owners of Fontenoy having
voting or dispositive control over shares held by Fontenoy are
as follows: David Hermanus Bester, Richard Scott, Linda Jean
Alton, Gordon John Mundy, and Katharine Georgina Lamb.
(9) Includes 20,513 shares that Ally is entitled to receive upon
exercise of the Ally Warrant. The beneficial owners of Ally
having voting or dispositive control over shares held by Ally
are as follows: Allen Gold and Gary Abriem.
(10) 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 217,701 shares held directly by 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 11 to this Table.
(11) 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) 154,000 shares owned
by Davis' spouse; and (iii) 217,701 shares currently held
directly by Blair and described in footnote 10 to this Table.
Mr. Davis disclaims beneficial ownership over the shares held
by his spouse. The number of shares indicated does not
include 7,000 shares of Common Stock which are issuable to
Blair upon exercise of warrants, as described in footnote 10
to this Table, which shares are to be sold under this
Prospectus.
(12) Includes 28,000 shares that Stahler is entitled to receive
upon exercise of the Stahler Warrant.
-48-
<PAGE>
(13) Includes 7,000 shares that Renov is entitled to receive upon
exercise of the Renov Warrant.
(14) Includes 5,000 shares that Bell is entitled to receive upon
exercise of the Bell Warrant.
(15) Represents shares that Liviakis received pursuant to the
Liviakis Exchange Agreement. The beneficial owners of
Liviakis having voting or dispositive control over shares held
by Liviakis are John Liviakis and his spouse, Renee Liviakis.
(16) Acosta's and Goodman's shares of Common Stock consist of
shares received by them in connection with a certain Asset
Purchase Agreement ("Action Agreement") dated on or about
April 1, 1998, by and among PFFL, Action, Goodman and Acosta,
dated April 1, 1998, as partial consideration for the purchase
by PFFL of all or substantially all of the assets of Action,
which is wholly owned by Acosta and Goodman. Hesco Sales, Inc.,
a creditor of Action, received its shares of Common Stock from
Action following the consummation of the Action Agreement.
(17) Includes 50,000 shares that Prag received pursuant to the
Liviakis Exchange Agreement and 10,000 shares held directly by
Prag.
(18) 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.
-49-
<PAGE>
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
("Conner & Winters"). Irwin H. Steinhorn, a shareholder of Conner
& Winters, has an individual retirement account which owns 385
shares of Common Stock.
EXPERTS
The financial statements and schedule incorporated by reference
in this Prospectus have been audited by BDO Seidman LLP, independent
certified public accountants to the extent and for the periods set
forth in their report incorporated herein by reference, and are
included herein in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
The financial statements and schedules regarding Chem-Con
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 Bovitz & Co. CPA, P.C.,
independent public accountants, and are included herein in reliance
upon the authority of said firm as experts in giving such reports.
-50-
<PAGE>
No dealer, salesman or other
person has been authorized to
give any information not
contained in this Prospectus
and, if given or made, such
information or representations
must not be relied upon as
having been authorized by the
Company or the Standby
Purchasers. This Prospectus
does not constitute an offer to
sell or a solicitation 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
jurisdiction. Neither the 8,291,072 Shares
delivery of this Prospectus nor
any sale hereunder shall under Perma-Fix Environmental Services, Inc.
any circumstances create any
implication that there has been
no change in the affairs of the
Company since the date hereof.
_______________________
Table of Contents Common Stock
Page
____
Available Information. . . . . .4
Incorporation by Reference . . .4
Risk Factors . . . . . . . . . .5 ____________
The Company. . . . . . . . . . .19 Prospectus
____________
Private Placements and
Exchange Agreements. . . . . . .30
Use of Proceeds. . . . . . . . .41
Summary of Securities Being
Offered. . . . . . . . . . . . .42
Selling Shareholders . . . . . .46
Plan of Distribution . . . . . .49 October ____, 1999
Legal Opinion. . . . . . . . . .50
Experts. . . . . . . . . . . . .50
<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). . . . . . $ 70,000.00
Accounting Fees and Expenses . . . . . . . $ 10,000.00
Printing . . . . . . . . . . . . . . . . . $ 2,500.00
Miscellaneous. . . . . . . . . . . . . . . $ 2,500.00
_____________
Total $ 89,961.37
=============
</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
<PAGE>
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.
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 as 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.
II-2
<PAGE>
Exhibit
No. Description
_______ ___________
4.13 Certificate of Elimination regarding the Series 6 Class F
Convertible Preferred Stock and the Series 7 Class G
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.
4.14 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.
4.17 Exchange Agreement exchanging 916 shares of Series 8 Class H
Convertible Preferred Stock, Par Value $.001 per share of
Perma-Fix Environmental Services, Inc. for 916 shares of
Series 12 Class L Convertible Preferred Stock, Par Value $.001
per share of Perma-Fix Environmental Services, Inc. dated July
15, 1999, between the Company and RBB Bank Aktiengesellschaft,
as incorporated by reference from Exhibit 4.1 to the Company's
Report on Form 10-Q for the period ended June 30, 1999.
4.18 Exchange Agreement exchanging 2,252 shares of Series 10 Class
J Convertible Preferred Stock, Par Value $.001 per share of
Perma-Fix Environmental Services, Inc. for 2,252 shares of
Series 13 Class Convertible Preferred Stock, Par Value $.001
per share of Perma-Fix Environmental Services, Inc. dated July
15, 1999, between the Company and RBB Bank Aktiengesellschaft,
as incorporated by reference from Exhibit 4.2 to the Company's
Report on Form 10-Q for the period ended June 30, 1999.
4.19 Exchange Agreement exchanging 1,769 shares of Series 3 Class
C Convertible Preferred Stock, Par Value $.001 per share of
Perma-Fix Environmental Services, Inc. for 1,769 shares of
Series 11 Class K Convertible Preferred Stock, Par Value $.001
per share of Perma-Fix Environmental Services, Inc. dated July
15, 1999, between the Company and RBB Bank Aktiengesellschaft,
as incorporated by reference from Exhibit 4.3 to the Company's
Report on Form 10-Q for the period ended June 30, 1999.
4.20 Certificate of Designations of Series 11 Class K Convertible
Preferred Stock, dated July 15, 1999, as incorporated by
reference from Exhibit 3(i) to the Company's Report on Form
10-Q for the period ended June 30, 1999.
4.21 Specimen copy of Certificate relating to the Series 11 Class
K Convertible Preferred Stock, as incorporated by reference
from Exhibit 4.5 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
4.22 Certificate of Designations of Series 12 Class L Convertible
Preferred Stock, dated July 15, 1999, as incorporated by
reference from Exhibit 3(i) to the Company's Report on Form
10-Q for the period ended June 30, 1999.
4.23 Specimen copy of Certificate relating to the Series 12 Class
L Convertible Preferred Stock, as incorporated by reference
from Exhibit 4.7 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
II-3
<PAGE>
Exhibit
No. Description
_______ ___________
4.24 Certificate of Designations of Series 13 Class M Convertible
Preferred Stock, dated July 15, 1999, as incorporated by
reference from Exhibit 3(i) to the Company's Report on Form
10-Q for the period ended June 30, 1999.
4.25 Specimen copy of Certificate relating to the Series 13 Class
M Convertible Preferred Stock, as incorporated by reference
from Exhibit 4.9 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
4.26 Exchange Agreement exchanging 1,769 shares of Series 11 Class
K Convertible Preferred Stock, Par Value $.001 per share of
Perma-Fix Environmental Services, Inc. for 1,769 shares of
Series 14 Class N Convertible Preferred Stock, Par Value $.001
per share of Perma-Fix Environmental Services, Inc. dated
August 3, 1999, between the Company and RBB Bank
Aktiengesellschaft, as incorporated by reference from Exhibit
4.10 to the Company's Report on Form 10-Q for the period ended
June 30, 1999.
4.27 Exchange Agreement exchanging 616 shares of Series 12 Class L
Convertible Preferred Stock, Par Value $.001 per share of
Perma-Fix Environmental Services, Inc. for 616 shares of
Series 15 Class O Convertible Preferred Stock, Par Value $.001
per share of Perma-Fix Environmental Services, Inc. dated
August 3, 1999, between the Company and RBB Bank
Aktiengesellschaft, as incorporated by reference from Exhibit
4.11 to the Company's Report on Form 10-Q for the period ended
June 30, 1999.
4.28 Exchange Agreement exchanging 1,802 shares of Series 13 Class
M Convertible Preferred Stock, Par Value $.001 per share of
Perma-Fix Environmental Services, Inc. for 1,802 shares of
Series 16 Class P Convertible Preferred Stock, Par Value $.001
per share of Perma-Fix Environmental Services, Inc. dated
August 3, 1999, between the Company and RBB Bank
Aktiengesellschaft, as incorporated by reference from Exhibit
4.12 to the Company's Report on Form 10-Q for the period ended
June 30, 1999.
4.29 Certificate of Designations of Series 14 Class N Convertible
Preferred Stock, dated August 10, 1999, as incorporated by
reference from Exhibit 3(i) to the Company's Report on Form
10-Q for the period ended June 30, 1999.
4.30 Specimen copy of Certificate relating to the Series 14 Class
N Convertible Preferred Stock, as incorporated by reference
from Exhibit 4.14 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
4.31 Certificate of Designations of Series 15 Class O Convertible
Preferred Stock, dated August 10, 1999, as incorporated by
reference from Exhibit 3(i) to the Company's Report on Form
10-Q for the period ended June 30, 1999.
4.32 Specimen copy of Certificate relating to the Series 15 Class
O Convertible Preferred Stock, as incorporated by reference
from Exhibit 4.16 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
4.33 Certificate of Designations of Series 16 Class P Convertible
Preferred Stock, dated August 10, 1999, as incorporated by
reference from Exhibit 3(i) to the Company's Report on Form
10-Q for the period ended June 30, 1999.
4.34 Specimen copy of Certificate relating to the Series 16 Class
P Convertible Preferred Stock, as incorporated by reference
from Exhibit 4.18 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
5.1** Opinion of Conner & Winters, a Professional Corporation.
23.1** Consent of BDO Seidman, LLP.
II-4
<PAGE>
Exhibit
No. Description
_______ ___________
23.2** Consent of Bovitz & Co., CPA, P.C.
23.3** Consent of Conner & Winters, as contained in Exhibit 5.1
hereto and incorporated herein by reference.
24.1* Powers of Attorney for Messrs. Zwecker, Gorlin, and
Colin, as contained in the Power of Attorney of the
signature page included in the previously filed copies
of this Registration Statement.
24.2** Power of Attorney for Mr. Sullivan.
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.
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.
II-5
<PAGE>
Exhibit
No. Description
_______ ___________
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 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.
99.24 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.
99.25 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.
99.26 Stock Purchase Agreement dated as of May 27, 1999, among
Perma-Fix Environmental Services, Inc., Chemical
Conservation Corporation, Chemical Conservation of
Georgia, Inc., the Thomas P. Sullivan Living Trust, dated
September 6, 1978, the Ann L. Sullivan Living Trust,
dated September 6, 1978, Thomas P. Sullivan, and Ann L.
Sullivan, as incorporated by reference from Exhibit 2.1
to the Company's Current Report on Form 8-K, earliest
event reported June 1, 1999.
99.27 Stock Purchase Agreement dated as of May 27, 1999, among
Perma-Fix Environmental Services, Inc., Chem-Met
Services, Inc., the Thomas P. Sullivan Living Trust,
dated September 6, 1978, the Ann L. Sullivan Living
Trust, dated September 6, 1978, Thomas P. Sullivan, and
Ann L. Sullivan, as incorporated by reference from
Exhibit 2.2 to the Company's Current Report on Form 8-K,
earliest event reported June 1, 1999.
99.28 Amendment and Joinder to Loan and Security Agreement (the
"Loan Amendment") dated May 27, 1999, among Congress
Financial Corporation (Florida), Perma-Fix Environmental
Services, Inc. and the subsidiaries of Perma-Fix
Environmental Services, Inc., as incorporated by
reference from Exhibit 4.1 to the Company's Current
Report on Form 8-K, earliest event reported June 1, 1999.
II-6
<PAGE>
Exhibit
No. Description
_______ ___________
99.29 Subordination Agreement dated May 27, 1999 among Congress
Financial Corporation (Florida), Perma-Fix Environmental
Services, Inc., the subsidiaries of Perma-Fix
Environmental Services, Inc., the Thomas P. Sullivan
Living Trust dated September 6, 1978 and the Ann L.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 4.2 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.30 Promissory Note for $1,230,000 issued to the Ann L.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 10.1 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.31 Promissory Note for $1,970,000 issued to the Ann L.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 10.2 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.32 Promissory Note for $1,500,000 issued to the Thomas P.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 10.3 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.33 Non-recourse Guaranty dated May 28, 1999, by and among
Chem-Met Services, Inc., the Thomas P. Sullivan Living
Trust dated September 6, 1978, and the Ann L. Sullivan
Living Trust dated September 6, 1978., as incorporated by
reference from Exhibit 10.4 to the Company's Current
Report on Form 8-K, earliest event reported June 1, 1999.
99.34 Mortgage dated May 28, 1999, by Chem-Met Services, Inc.
to the Thomas P. Sullivan Living Trust dated September 6,
1978 and the Ann L. Sullivan Living Trust dated
September 6, 1978, as incorporated by reference from
Exhibit 10.5 to the Company's Current Report on Form 8-K,
earliest event reported June 1, 1999.
99.35 Exchange Agreement dated March 14, 1999, among Liviakis
Financial Communications, Inc., Robert B. Prag and Perma-
Fix Environmental Services, Inc. as incorporated by
reference from Exhibit 10.56 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
___________________________
*Previously filed
**Filed herein
</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;
II-7
<PAGE>
(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
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-8
<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 20th day of October,
1999.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By: /s/ Louis 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.
Signature Title Date
_________ _____ _____
/s/ Louis Centofanti
___________________________ Chairman of the Board of October 20, 1999
Dr. Louis F. Centofanti Directors, President, and
Chief Executive Officer
(Principal Executive
Officer)
/s/ Richard T. Kelecy
___________________________ Chief Financial Officer October 20, 1999
Richard T. Kelecy (Principal Financial
and Accounting Officer)
*
___________________________ Director October 20, 1999
Mark A. Zwecker
*
___________________________ Director October 20, 1999
Steve Gorlin
*
___________________________ Director October 20, 1999
Jon Colin
/s/ Thomas P. Sullivan
___________________________ Director October 20, 1999
Thomas P. Sullivan
By /s/ Louis Centofanti
_________________________ October 20, 1999
Dr. Louis F. Centofanti
Attorney In Fact
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
______________
Exhibit Sequential
No. Description Page No.
_______ ____________ ___________
<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 Convert-
ible Preferred Stock as 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.
<PAGE>
Exhibit Sequential
No. Description Page No.
_______ ____________ ___________
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 Convert-
ible 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, as incorporated by reference
from Exhibit 3(i) to the Company's Report on Form 10-Q for
the quarter ended June 30, 1998.
4.14 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 Convert-
ible 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.
4.17 Exchange Agreement exchanging 916 shares of Series 8 Class H
Convertible Preferred Stock, Par Value $.001 per share of
Perma-Fix Environmental Services, Inc. for 916 shares of
Series 12 Class L Convertible Preferred Stock, Par Value
$.001 per share of Perma-Fix Environmental Services, Inc.
dated July 15, 1999, between the Company and RBB Bank
Aktiengesellschaft, as incorporated by reference from
Exhibit 4.1 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
<PAGE>
Exhibit Sequential
No. Description Page No.
_______ ___________ __________
4.18 Exchange Agreement exchanging 2,252 shares of Series 10
Class J Convertible Preferred Stock, Par Value $.001 per
share of Perma-Fix Environmental Services, Inc. for 2,252
shares of Series 13 Class Convertible Preferred Stock,
Par Value $.001 per share of Perma-Fix Environmental
Services, Inc. dated July 15, 1999, between the Company
and RBB Bank Aktiengesellschaft, as incorporated by
reference from Exhibit 4.2 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.19 Exchange Agreement exchanging 1,769 shares of Series 3
Class C Convertible Preferred Stock, Par Value $.001 per
share of Perma-Fix Environmental Services, Inc. for 1,769
shares of Series 11 Class K Convertible Preferred Stock,
Par Value $.001 per share of Perma-Fix Environmental
Services, Inc. dated July 15, 1999, between the Company
and RBB Bank Aktiengesellschaft, as incorporated by
reference from Exhibit 4.3 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.20 Certificate of Designations of Series 11 Class K Convert-
ible Preferred Stock, dated July 15, 1999, as incorporated
by reference from Exhibit 3(i) to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.21 Specimen copy of Certificate relating to the Series 11
Class K Convertible Preferred Stock, as incorporated by
reference from Exhibit 4.5 to the Company's Report on Form
10-Q for the period ended June 30, 1999.
4.22 Certificate of Designations of Series 12 Class L Convert-
ible Preferred Stock, dated July 15, 1999, as incorporated
by reference from Exhibit 3(i) to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.23 Specimen copy of Certificate relating to the Series 12
Class L Convertible Preferred Stock, as incorporated by
reference from Exhibit 4.7 to the Company's Report on
Form 10-Q for the period ended June 30, 1999..
4.24 Certificate of Designations of Series 13 Class M Convert-
ible Preferred Stock, dated July 15, 1999, as incorporated
by reference from Exhibit 3(i) to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.25 Specimen copy of Certificate relating to the Series 13 Class
M Convertible Preferred Stock, as incorporated by reference
from Exhibit 4.9 to the Company's Report on Form 10-Q for the
period ended June 30, 1999.
<PAGE>
Exhibit Sequential
No. Description Page No.
_______ ___________ __________
4.26 Exchange Agreement exchanging 1,769 shares of Series 11
Class K Convertible Preferred Stock, Par Value $.001 per
share of Perma-Fix Environmental Services, Inc. for 1,769
shares of Series 14 Class N Convertible Preferred Stock,
Par Value $.001 per share of Perma-Fix Environmental
Services, Inc. dated August 3, 1999, between the Company
and RBB Bank Aktiengesellschaft, as incorporated by
reference from Exhibit 4.10 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.27 Exchange Agreement exchanging 616 shares of Series 12
Class L Convertible Preferred Stock, Par Value $.001 per
share of Perma-Fix Environmental Services, Inc. for 616
shares of Series 15 Class O Convertible Preferred Stock,
Par Value $.001 per share of Perma-Fix Environmental
Services, Inc. dated August 3, 1999, between the Company
and RBB Bank Aktiengesellschaft, as incorporated by
reference from Exhibit 4.11 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.28 Exchange Agreement exchanging 1,802 shares of Series 13
Class M Convertible Preferred Stock, Par Value $.001 per
share of Perma-Fix Environmental Services, Inc. for 1,802
shares of Series 16 Class P Convertible Preferred Stock,
Par Value $.001 per share of Perma-Fix Environmental
Services, Inc. dated August 3, 1999, between the Company
and RBB Bank Aktiengesellschaft, as incorporated by
reference from Exhibit 4.12 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.29 Certificate of Designations of Series 14 Class N Convert-
ible Preferred Stock, dated August 10, 1999, as incorpor-
ated by reference from Exhibit 3(i) to the Company's Report
on Form 10-Q for the period ended June 30, 1999.
4.30 Specimen copy of Certificate relating to the Series 14
Class N Convertible Preferred Stock, as incorporated by
reference from Exhibit 4.14 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
4.31 Certificate of Designations of Series 15 Class O Convert-
ible Preferred Stock, dated August 10, 1999, as incorpor-
ated by reference from Exhibit 3(i) to the Company's
Report on Form 10-Q for the period ended June 30, 1999.
4.32 Specimen copy of Certificate relating to the Series 15
Class O Convertible Preferred Stock, as incorporated by
reference from Exhibit 4.16 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
<PAGE>
Exhibit Sequential
No. Description Page No.
_______ ___________ __________
4.33 Certificate of Designations of Series 16 Class P Convert-
ible Preferred Stock, dated August 10, 1999, as incorpor-
ated by reference from Exhibit 3(i) to the Company's Report
on Form 10-Q for the period ended June 30, 1999.
4.34 Specimen copy of Certificate relating to the Series 16
Class P Convertible Preferred Stock, as incorporated by
reference from Exhibit 4.18 to the Company's Report on
Form 10-Q for the period ended June 30, 1999.
5.1** Opinion of Conner & Winters, a Professional Corporation. 70
23.1** Consent of BDO Seidman, LLP. 77
23.2** Consent of Bovitz & Co., CPA, P.C. 78
23.3** Consent of Conner & Winters, as contained in Exhibit 5.1
hereto and incorporated herein by reference.
24.1* Powers of Attorney for Messrs. Zwecker, Gorlin, and
Colin, as contained in the Power of Attorney of the
signature page included in the previously filed copies
of this Registration Statement.
24.2** Power of Attorney for Mr. Sullivan. 79
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.
<PAGE>
Exhibit Sequential
No. Description Page No.
_______ ___________ __________
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.
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.
<PAGE>
Exhibit Sequential
No. Description Page No.
_______ ___________ __________
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 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.
99.24 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.
99.25 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.
99.26 Stock Purchase Agreement dated as of May 27, 1999, among
Perma-Fix Environmental Services, Inc., Chemical
Conservation Corporation, Chemical Conservation of
Georgia, Inc., the Thomas P. Sullivan Living Trust, dated
September 6, 1978, the Ann L. Sullivan Living Trust,
dated September 6, 1978, Thomas P. Sullivan, and Ann L.
Sullivan, as incorporated by reference from Exhibit 2.1
to the Company's Current Report on Form 8-K, earliest
event reported June 1, 1999.
99.27 Stock Purchase Agreement dated as of May 27, 1999, among
Perma-Fix Environmental Services, Inc., Chem-Met
Services, Inc., the Thomas P. Sullivan Living Trust,
dated September 6, 1978, the Ann L. Sullivan Living
Trust, dated September 6, 1978, Thomas P. Sullivan, and
Ann L. Sullivan, as incorporated by reference from
Exhibit 2.2 to the Company's Current Report on Form 8-K,
earliest event reported June 1, 1999.
99.28 Amendment and Joinder to Loan and Security Agreement (the
"Loan Amendment") dated May 27, 1999, among Congress
Financial Corporation (Florida), Perma-Fix Environmental
Services, Inc. and the subsidiaries of Perma-Fix
Environmental Services, Inc., as incorporated by
reference from Exhibit 4.1 to the Company's Current
Report on Form 8-K, earliest event reported June 1, 1999.
<PAGE>
Exhibit Sequential
No. Description Page No.
_______ ___________ __________
99.29 Subordination Agreement dated May 27, 1999 among Congress
Financial Corporation (Florida), Perma-Fix Environmental
Services, Inc., the subsidiaries of Perma-Fix
Environmental Services, Inc., the Thomas P. Sullivan
Living Trust dated September 6, 1978 and the Ann L.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 4.2 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.30 Promissory Note for $1,230,000 issued to the Ann L.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 10.1 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.31 Promissory Note for $1,970,000 issued to the Ann L.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 10.2 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.32 Promissory Note for $1,500,000 issued to the Thomas P.
Sullivan Living Trust dated September 6, 1978, as
incorporated by reference from Exhibit 10.3 to the
Company's Current Report on Form 8-K, earliest event
reported June 1, 1999.
99.33 Non-recourse Guaranty dated May 28, 1999, by and among
Chem-Met Services, Inc., the Thomas P. Sullivan Living
Trust dated September 6, 1978, and the Ann L. Sullivan
Living Trust dated September 6, 1978., as incorporated by
reference from Exhibit 10.4 to the Company's Current
Report on Form 8-K, earliest event reported June 1, 1999.
99.34 Mortgage dated May 28, 1999, by Chem-Met Services, Inc.
to the Thomas P. Sullivan Living Trust dated September 6,
1978 and the Ann L. Sullivan Living Trust dated
September 6, 1978, as incorporated by reference from
Exhibit 10.5 to the Company's Current Report on Form 8-K,
earliest event reported June 1, 1999.
99.35 Exchange Agreement dated March 14, 1999, among Liviakis
Financial Communications, Inc., Robert B. Prag and Perma-
Fix Environmental Services, Inc. as incorporated by
reference from Exhibit 10.56 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
___________________________
*Previously filed
**Filed herein
</TABLE>
CONNER & WINTERS
A PROFESSIONAL CORPORATION
ONE LEADERSHIP SQUARE, SUITE 1700
OKLAHOMA CITY, OKLAHOMA 73102
(405) 272-5711
October 21, 1999
Perma-Fix Environmental Services, Inc.
1940 Northwest 67th Place
Gainesville, Florida 32653
Re: Perma-Fix Environmental Services, Inc.; Amendment
No. 5 to Form S-3 Registration Statement;
Registration No. 333-43149; Registering 8,291,072
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 by Amendment
No. 5 (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 8,291,072 shares of the Company's Common Stock,
par value $.001 per share ("Common Stock") to be reoffered or
resold from time to time by certain Selling Shareholders (as
defined in the Registration Statement).
Included in the Registration Statement are shares of Common
Stock issued upon conversion and/or in payment of dividends on
the following series of convertible preferred stock which have
undergone various exchanges as described hereafter:
1. 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 Preferred Stock"), Series 8 Class H Convertible
Preferred Stock, par value $.001 per share ("Series 8
Class H Preferred Stock"), Series 12 Class L
Convertible Preferred Stock, par value $.001 per share
("Series 12 Class L Preferred Stock"), and Series 15
Class O Convertible Preferred Stock ("Series 15 Class O
Preferred Stock") (with the Series 4 Class D Preferred
Stock being exchanged for the Series 6 Class F
Preferred Stock, the Series 6 Class F Preferred Stock
<PAGE>
Perma-Fix Environmental Services, Inc.
October 21, 1999
Page 2
being exchanged for the Series 8 Class H Preferred
Stock, the Series 8 Class H Preferred Stock being
exchanged for the Series 12 Class L Preferred Stock,
and the Series 12 Class L Preferred Stock being
exchanged for the Series 15 Class O Preferred Stock);
2. Series 10 Class J Convertible Preferred Stock, par
value $.001 per share ("Series 10 Class J Preferred
Stock"), Series 13 Class M Convertible Preferred Stock,
par value $.001 per share ("Series 13 Class M Preferred
Stock"), and Series 16 Class P Convertible Preferred
Stock, par value $.001 per share ("Series 16 Class P
Preferred Stock") (with the Series 10 Class J Preferred
Stock being exchanged for the Series 13 Class M
Preferred Stock, and the Series 13 Class M Preferred
Stock being exchanged for the Series 16 Class P
Preferred Stock); and
3. Series 5 Class E Convertible Preferred Stock, par value
$.001 per share ("Series 5 Class E Preferred Stock"),
Series 7 Class G Convertible Preferred Stock, par value
$.001 per share ("Series 7 Class G Preferred Stock"),
and Series 9 Class I Convertible Preferred Stock, par
value $.001 per share ("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).
The following shares are covered by the Registration Statement:
(i) up to 6,002,932 shares of the Company's Common
Stock, par value $.001 per share ("Common Stock"),
by RBB Bank Aktiengesellschaft ("RBB Bank") that
have been issued or are issuable by the Company to
RBB Bank ("RBB Shares") as follows:
(a) up to 2,467,810 shares previously issued or
issuable upon conversion of shares of the
Company's Series 6 Class F Preferred Stock,
Series 8 Class H Preferred Stock, Series 12
Class L Preferred Stock and Series 15 Class O
Preferred Stock;
(b) up to 147,353 shares which have been issued
or are issuable in payment of dividends on
the Series 4 Class D Preferred Stock, Series
6 Class F Preferred Stock, Series 8 Class H
Preferred Stock, Series 12 Class L Preferred
Stock, and Series 15 Class O Preferred Stock;
(c) 2,172,762 shares previously issued or
issuable upon conversion of the Series 10
Class J Preferred Stock and the Series 16
Class P Preferred Stock;
<PAGE>
Perma-Fix Environmental Services, Inc.
October 21, 1999
Page 3
(d) up to 208,757 shares which have been issued
or are issuable in payment of dividends on
the on the Series 10 Class J Preferred Stock,
Series 13 Class M Preferred Stock, and Series
16 Class P Preferred Stock;
(e) up to 656,250 shares which are issuable upon
exercise of the Series 6 Warrants (as defined
in the Registration Statement);
(f) 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 389,453 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 310,000 shares issuable upon conversion
of the Company's Series 9 Class I Preferred
Stock;
(b) up to 44,453 shares previously issued or
issuable in payment of dividends on the
Series 5 Class E Preferred Stock, Series 7
Class G Preferred Stock, and 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 150,000 shares of Common Stock by
Liviakis Financial Communications, Inc.
("Liviakis") that were issued to Liviakis
("Liviakis Shares") in connection with an
exchange agreement ("Liviakis Exchange
Agreement") for a warrant previously issued
by the Company to Liviakis;
(iv) 50,000 shares of Common Stock by Robert B. Prag,
an executive officer of Liviakis ("Prag") that
were issued to Prag ("Prag Shares") in connection
with the Liviakis Exchange Agreement for a warrant
previously issued by the Company to Prag;
(v) up to 450,000 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 and a warrant previously
issued to Fontenoy's predecessor Dionysus Limited
(hereinafter collectively referred to as the
"Fontenoy Warrants");
<PAGE>
Perma-Fix Environmental Services, Inc.
October 21, 1999
Page 4
(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 Warrant (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 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;
(viii) 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;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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");
<PAGE>
Perma-Fix Environmental Services, Inc.
October 21, 1999
Page 5
(xiii) 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");
(xiv) 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");
(xv) up to 31,176 shares of Common Stock which were
issued to Evelio Acosta ("Acosta Shares") in
connection with an Asset Purchase Agreement
("Asset Purchase Agreement");
(xvi) up to 31,175 shares of Common Stock which were issued
to Lewis R. Goodman ("Goodman Shares") in connection
with the Asset Purchase Agreement; and
(xvii) up to 140,823 shares of Common Stock which were issued
to Hesco Sales, Inc. ("Hesco Shares") in connection
with the Asset Purchase Agreement;
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 previously issued or issuable
pursuant to the terms of the Series 4 Class D
Preferred Stock, Series 6 Class F Preferred Stock,
Series 8 Class H Preferred Stock, Series 12 Class
L Preferred Stock, Series 15 Class O Preferred
Stock, the Series 6 Warrants, the Series 10 Class
J Preferred Stock, the Series 13 Class M Preferred
Stock, the Series 16 Class P Preferred Stock, and
the Series 10 Warrants constitute or will
constitute, when so issued, validly issued and
fully paid and nonassessable shares of Common
Stock;
(ii) the Infinity Shares previously issued or issuable
pursuant to the terms of the Infinity Shares
previously issued 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 constitute or will
constitute, when so issued, validly issued and
fully paid and nonassessable shares of Common
Stock;
<PAGE>
Perma-Fix Environmental Services, Inc.
October 21, 1999
Page 6
(iii) the Liviakis Shares previously issued by the Company
pursuant to the terms of the Liviakis Exchange
Agreement, constitute validly issued and fully paid and
nonassessable shares of Common Stock;
(iv) the Prag Shares previously issued by the Company
pursuant to the terms of the Liviakis Exchange
Agreement, constitute 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
Fontenoy Warrants, 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 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;
(viii) 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;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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;
<PAGE>
Perma-Fix Environmental Services, Inc.
October 21, 1999
Page 7
(xiii) 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;
(xiv) 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;
(xv) the Acosta Shares previously issued by the Company
pursuant to the terms of the Asset Purchase Agreement,
constitute validly issued and fully paid and
nonassessable shares of Common Stock;
(xvi) the Goodman Shares previously issued by the Company
pursuant to the terms of the Asset Purchase Agreement,
constitute validly issued and fully paid and
nonassessable shares of Common Stock; and
(xvii) the Hesco Shares previously issued by the Company
pursuant to the terms of the Asset Purchase Agreement,
constitute 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
Consent of Independent
Certified Public Accountants
Perma-Fix Environmental Services, Inc.
Gainesville, Florida
We hereby consent to the incorporation by reference into
this Registration Statement on Form S-3, Registration No.
333-43149, of our report dated March 5, 1999, relating to
the consolidated financial statements of Perma-Fix
Environmental Services, Inc. appearing in the Annual
Report on Form 10-K for the year ended December 31,
1998.
We also consent to the reference to us under the heading
"Experts" in the Prospectus.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Orlando, Florida
October 20, 1999
B O V I T Z
___________________
& C O, C P A, P. C.
CERTIFIED PUBLIC ACCOUNTANTS
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Perma-Fix Environmental Services, Inc.
Gainesville, Florida
We hereby consent to the incorporation by reference into this
Registration Statement on Form S-3, Registration No. 333-43149,
of our report dated January 26, 1999, relating to the combined
financial statements and schedule of Chemical Conservation
Corporation, Chemical Conservation of Georgia, Inc. and Chem-Met
Services, Inc. and subsidiaries appearing in the Report on
Form 8-K/A, earliest event June 1, 1999 of Perma-Fix
Environmental Services, Inc. We also consent to the reference to
us under the heading "Experts" in the Prospectus.
/s/ Robert L. Bovitz
Robert L. Bovitz
Bovitz & Co., CPA, P.C.
Trenton, Michigan
October 19, 1999
1651 Kingsway Court * P.O. Box 445 / Trenton, Michigan 48183-0445
Phone: (734) 671-5300 / Fax: (734) 671-6504
Website: bovitzcpa.com / E-Mail: [email protected]
POWER OF ATTORNEY
------------------
KNOW ALL PERSONS BY THESE PRESENTS that Thomas P. Sullivan
hereby constitutes and appoints Dr. Louis F. Centofanti as his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-
effective amendments) to the Registration Statement of Perma-Fix
Environmental Services, Inc., Registration No. 333-43149, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite
and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, shall do or cause to be done by
virtue hereof.
/s/ Thomas P. Sullivan
______________________________
Thomas P. Sullivan, Director
Perma-Fix Environmental Services, Inc.
October 20, 1999
