Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
Registration Statement
Under the
Securities Act of 1933
IDM ENVIRONMENTAL CORP.
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(Exact Name of Registrant as Specified in its Charter)
New Jersey 22-2194790
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
396 Whitehead Avenue
South River, New Jersey 08882
(908) 390-9550
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(Address, including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Joel A. Freedman, President
IDM Environmental Corp.
396 Whitehead Avenue
South River, New Jersey 08882
(908) 390-9550
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
A copy to:
Michael Sanders, Esq.
Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, Texas 77002
(713) 547-8900
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
maximum maximum Amount of
Title of securities offering price per aggregate registration
to be registered Amount to be registered (1) share (2) offering price fee
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<S> <C> <C> <C> <C>
Common Stock,
$.001 par value 3,000,000 $ 2.641 $ 7,923,000.00 $ 2,400.91
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(1) Includes a presently indeterminate number of shares issued or issuable upon
conversion of or otherwise in respect of Registrant's Series B 7%
Convertible Preferred Stock, as such number may be adjusted in accordance
with Rule 416.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) based on the average of the bid and asked price as reported
on Nasdaq on June 2, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
IDM ENVIRONMENTAL CORP.
3,000,000 Shares of Common Stock
$.001 par value
All of the shares of Common Stock, par value $.001 per share ("Common
Stock"), of IDM Environmental Corp., a New Jersey corporation ("IDM" or the
"Company"), offered hereby are being offered for resale by certain stockholders
of the Company (the "Selling Stockholders") as described more fully herein. The
Company will not receive any proceeds from the sale of the shares offered
hereby. The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "IDMC." The last reported sales price of the Company's Common
Stock on the Nasdaq National Market on June 2, 1997 was $2.53125 per share.
The shares of Common Stock offered hereby by the Selling Stockholders
consist of a presently indeterminate number of shares issued or issuable upon
conversion or otherwise in respect of 300 shares of Series B 7% Convertible
Preferred Stock (the "Series B Preferred Shares"). For the purpose of
determining the number of shares of Common Stock to be registered hereby, the
number of shares of Common Stock calculated to be issuable in connection with
the conversion of the Series B Preferred Shares is based on an average closing
bid price of the Common Stock on the five trading days ended June 2, 1997
($1.74375per share), and has been arbitrarily selected. The number of shares
available for resale is subject to adjustment and could be materially less or
more than such estimated amount depending on factors which cannot be predicted
by IDM at this time, including, among others, the timing of conversion of the
Series B Preferred Shares and the future market price of the Common Stock at the
time of conversion. This presentation is not intended, and should in no way be
construed, to constitute a prediction as to the future market price of the
Common Stock. See "Selling Stockholders" for a description of the dividend
rights and conversion terms of the Series B Preferred Shares.
The Selling Stockholders, directly or through agents, broker-dealers or
underwriters, may sell the Common Stock offered hereby from time to time on
terms to be determined at the time of sale, in transactions on the Nasdaq
National Market, in privately negotiated transactions or otherwise. The Selling
Stockholders and any agents, broker-dealers or underwriters that participate in
the distribution of the Common Stock may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Act"), and any
commission received by them and any profit on the resale of the Common Stock
purchased by them may be deemed to be underwriting discounts or commissions
under the Act. See "Plan of Distribution."
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE
A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is June , 1997
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All expenses of this offering will be paid by the Company except for
commissions, fees and discounts of any underwriters, brokers, dealers or agents
retained by the Selling Stockholders. Estimated expenses payable by the Company
in connection with this offering are approximately $30,000. The aggregate
proceeds to the Selling Stockholders from the Common Stock will be the purchase
price of the Common Stock sold less the aggregate agents' commissions and
underwriters' discounts, if any. The Company has agreed to indemnify the Selling
Stockholders and certain other persons against certain liabilities, including
liabilities under the Act.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
TABLE OF CONTENTS
Available Information...................................................... 3
Incorporation of Certain Documents by Reference............................ 3
The Company................................................................ 4
Risk Factors............................................................... 4
Selling Stockholders....................................................... 11
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
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AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied at
the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Common Stock of the Company is quoted on the Nasdaq
National Market. Reports and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006. The Commission also maintains a World Wide
Web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, including the Company,
that file electronically with the Commission.
A registration statement on Form S-3 with respect to the Common Stock
offered hereby (the "Registration Statement") has been filed with the Commission
under the Act. This Prospectus does not contain all of the information contained
in such Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus
regarding the contents of any contract or any other document are not necessarily
complete and, in each instance, reference is hereby made to the copy of such
contract or document filed as an exhibit to the Registration Statement. The
Registration Statement, including the exhibits thereto, may be inspected without
charge at the Commissions' principal office in Washington, D.C., and copies of
all or any part thereof may be obtained from the Public Reference Section,
Securities and Exchange Commission, Washington, D.C. 20549, upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed or to be filed with the Commission under the
Exchange Act are hereby incorporated by reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
(2) The Company's Quarterly Report on Form 10-Q for the quarter end March
31, 1997.
(3) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual Report
referred to in (1) above.
(4) The description of securities included in Form 8-A declared effective
by the Commission on April 26, 1994 (Commission File No. 0-23900).
All documents filed by the Company pursuant to Section 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 shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing such documents. Any
statements contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed documents which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
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The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus has been delivered, upon written or
oral request of such person, a copy of any or all of the documents that have
been incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such requests may be directed to Mr. Michael B. Killeen, Chief
Financial Officer, IDM Environmental Corp., 396 Whitehead Avenue, South River,
New Jersey 08882, Telephone Number (908) 390-9550.
THE COMPANY
The Company is a national provider of specialized contract services with an
emphasis on plant decommissioning, dismantlement, deconstruction and
environmental remediation. The Company serves private industry, utilities and
governmental entities in the areas of plant dismantling, plant deconstruction
and relocation, asbestos abatement, radiological remediation and hazardous waste
remediation, among others. Services are generally provided by trained craftsmen
employed by the Company based on work plans, schedules and cost estimates
developed by the Company's management team and implemented under the supervision
of Company superintendents and foremen. In order to satisfy customer concerns
with respect to project scheduling, cost control, work responsibility and
overall performance, the Company's full time work force is cross trained in each
of the Company's specialty areas allowing the Company to perform "whole jobs" in
virtually all instances. In addition to offering environmental services, the
Company buys and sells equipment and entire plants and offers relocation and
reinstallation services with respect to such plants and equipment.
The Company was incorporated under the laws of the State of New Jersey in
1978. The Company's executive offices are located at 396 Whitehead Avenue, South
River, New Jersey 08882, telephone number (908) 390-9550.
RISK FACTORS
The securities which are the subject of this Prospectus are subject to
certain risk factors, some of which are described below. The following risk
factors should not be considered to be all of the potential risks to which the
Company and the securities are subject. The risk factors set forth below should
be considered carefully with respect to any investment in the Common Stock
underlying the Preferred Shares.
Losses From Operations. The Company has experienced significant operating
losses during the past two years. The Company had net losses of $9.1 million
during the year ended December 31, 1996 and $3.9 million during the year ended
December 31, 1995. Such losses have been attributable to a combination of
substantial infrastructure expenditures to support future growth, delays in the
commencement of projects and unusual expenses. Until such time as the Company is
able to begin one or more large projects on which delays in commencement have
been experienced, or until such time as other projects are begun, if ever, the
Company will continue to experience losses. While management believes that
multiple large projects will be performed during 1997, based on past delays and
past operating results, there can be no assurance that the Company will be able
to operate profitably during 1997 or in the future.
Competition. Competition in the environmental services industry is intense.
The industry is dominated by large architectural engineering firms such as
Bechtel, Fluor, Westinghouse, Foster Wheeler and Haliburton, among others. Such
firms are called upon to serve as primary contractors and consultants on a large
portion of the Superfund, federal and state government and Department of Energy
projects. Additionally, many smaller engineering firms, construction firms,
consulting firms and other specialty firms have entered the environmental
services industry in recent years and additional firms can be expected to enter
into the industry. Many of the firms with which the Company competes in the
environmental services industry have significantly greater financial resources
and more established market positions than the Company. While management
believes that the Company's experience and expertise in the specialty areas of
decontamination and decommissioning will allow the Company to compete
successfully, there can be no assurance that other firms will not expand into or
develop expertise in the areas in which the Company specializes, thus decreasing
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any competitive advantage which the Company may enjoy.
Dependence on Ability to Secure Bonding. In order to successfully bid on
and secure contracts to perform environmental services of the nature offered by
the Company, the Company must generally provide surety bonds with respect to
each respective project. Thus, the number and size of contracts which the
Company can perform is directly dependent upon the Company's ability to obtain
bonding which, in turn, is dependent upon the Company's net worth and liquid
working capital. The Company, prior to completion of its initial public
offering, was unable to secure additional and larger contracts as a result of
such bonding requirements and may incur similar difficulties in the future.
While the receipt of funds from its public offering has allowed the Company to
substantially increase its working capital and net worth, thus increasing its
bonding capacity, there can be no assurance that the Company will have adequate
bonding capacity to bid on all of the projects which it would otherwise bid upon
were it to have such bonding capacity or that it will in fact be successful in
obtaining additional jobs on which it may bid.
Compliance with, and Potential Liability under, Applicable Environmental
Regulations. The scope and nature of environmental regulation, at the federal,
state and local levels, has expanded dramatically in recent years. Such
regulations impose stringent guidelines on companies which generate and handle
hazardous materials as well as other companies involved in various aspects of
the environmental services industry. Any future increases or changes in
regulation may result in the Company incurring additional costs for equipment,
retraining, development of new remediation or abatement plans, handling of
hazardous materials and other costs.
In addition to the burdens imposed on Company operations by various
environmental regulations, federal law imposes strict joint and several
liability upon present and former owners and operators of facilities that
release hazardous substances into the environment and the generators and
transporters of such substances as well as persons arranging for the disposal of
such substances. All such persons may be liable for the costs and damages
(including penalties and fines) associated with environmental remediation
including investigation, clean up and natural resource damages. Such costs can
be very substantial. The Company may be liable for such costs and damages in
connection with the generation, transportation and disposal of hazardous
materials. Additionally, in light of the growing trend to impose and expand the
responsibility and scope of liability for environmental clean-up costs, there
can be no assurance that future regulations or court rulings will not result in
the Company being exposed to clean-up cost liability, or other liability, for
activities conducted by the Company which do not presently expose the Company to
such liability.
The Company's surplus equipment and scrap sales operations may also expose
the Company to liability under environmental laws in the event of the sale of
contaminated equipment or scrap. While the Company inspects all such equipment
and scrap before purchasing or selling such items, there is no assurance that
such inspection will identify all possible contamination and the Company may be
found to have certain liability should such items be bought or sold by the
Company. The Company has not experienced any claims with respect to the purchase
or sale of contaminated equipment or scrap.
While the Company has not incurred, or been notified that it may be treated
as a potentially responsible party with respect to, any liability as a generator
or transporter of hazardous materials, the Company on occasion has been named in
complaints, and may be named in future complaints, as violating various
regulations governing the removal of asbestos. The Company has settled certain
complaints in the past by agreeing to pay civil fines or penalties without
admitting liability. There can be no assurance, however, that any complaints
which may arise in the future can be settled on a favorable basis. In any event,
because of the nature of the Company's operations and the industry in which it
operates, the potential for liability and the extent of such potential liability
is very substantial. Any such liability which is determined to exist could have
a material adverse impact on the Company's business and financial condition.
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Dependence on Continued Environmental Regulation. The growth of the
environmental services industry, as well as the growth of the Company, has been
largely attributable to, and tracks, the increase in environmental regulation
since the 1970's. The demand for environmental services has been largely the
result of facility owners attempting to comply with, or avoid liability under,
existing or newly imposed environmental regulations at the federal, state and
local levels. Because of the burden imposed on industry in complying with such
regulations, efforts have been made by various groups to seek the relaxation or
repeal of certain forms of environmental regulation. While such efforts to relax
environmental regulation have been largely unsuccessful to date, there can be no
assurance that the scope or growth of such regulation will not be curtailed in
the future. Any relaxation of environmental regulation may result in a decline
in demand for environmental services and may adversely effect the operations of
the Company.
Dependence on Spending Levels of Governmental and Industrial Entities.
Because of the nature of sites requiring environmental services, the growing
public emphasis on environmental matters and the cost of environmental services,
a significant portion of all funds spent for such services has been spent by
governmental agencies and large industrial concerns. While third party
reimbursement may be sought in various clean-ups, most Superfund clean-ups as
well as weapons and other nuclear facility clean-ups involve significant
spending by governmental agencies. As budget constraints and emphasis on
employment, international competition and other considerations grow, certain
governmental agencies and industrial concerns may choose to delay or curtail
expenditures for environmental services. Any curtailment or delays in spending
for environmental services by governmental agencies or large industrial concerns
can be expected to have a material adverse effect on the environmental services
industry and on the operations and profitability of the Company.
Limited Insurance Coverage. While the Company maintains insurance coverage,
including environmental impairment liability insurance covering such areas as
environmental clean ups, corrective action or damages, the Company's
environmental impairment insurance policy does not cover any liability arising
from radiological operations other than low level radioactive soil excavation
and facility cleaning. While the Company has evaluated such additional insurance
coverage in the past and may evaluate the same in the future, the Company does
not anticipate that such additional insurance will be available in the
foreseeable future at prices considered to be reasonable. If, in the absence of
such insurance, the Company were to incur liability for environmental impairment
in connection with its excluded radiological services, such liability could have
a material adverse effect on the financial condition and results of operations
of the Company. Further, as the cost of cleaning or correcting environmental
hazards can be extremely high, even if the Company is determined to be liable
for costs which are covered by insurance, there is no assurance that such
coverage will be adequate to pay the entire cost thereof and, therefor, the
Company may incur losses in excess of its insurance coverage.
Dependence on Major Customer. A significant portion of the Company's
revenues in recent years have come from, and a significant portion of the
Company's resources have been devoted to, one or more large clients (e.g.,
Allied-Signal and FFC Jordan Fertilizer Company). Revenues from the FFC Jordan
project constituted 34% of the Company's total revenues in 1995 and 44.7% of
revenues in 1994. Likewise, the Allied- Signal project accounted for 34.8% and
26.4% of the Company's total revenues in 1991 and 1992, respectively. In early
1993, the Company completed the Allied-Signal project and the FFC Jordan project
was completed during 1996. In order for the Company to replace the revenues
attributable to such large projects, the Company must secure one or more large
projects or a large number of smaller projects. While the Company believes that
it can successfully replace its past and ongoing large projects with other large
projects and with a large volume of smaller projects, there is no assurance that
the Company can adequately replace such projects with other projects which will
produce as much revenue. Further, there is no assurance that the Company will
not continue to be dependent upon a small number of major customers for a
significant portion of its revenues and earnings.
Dependence on Key Personnel. The Company's operations are dependent upon
the continued efforts of senior management. While the Company has entered into
employment agreements with Joel Freedman and Frank Falco, the Company's
principal executive officers, the Company does not have employment agreements
with any of its other officers or employees. The Company has, however, entered
into agreements with certain executive personnel pursuant to which such persons
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have agreed to maintain the confidentiality of certain information and to not
enter into competition with the Company for a period of three years after the
termination of their employment with the Company within 250 miles of the
Company's principal places of business. However, because of the lack of
accompanying employment agreements and the limited scope of such Agreements and
the general difficulty of enforcing noncompetition agreements, there is no
assurance that such agreements can be enforced or that one or more of the
Company's key employees may not leave the Company and enter into direct
competition with the Company. Should any of the members of the Company's senior
management be unable or unwilling to continue in their present roles or should
such persons determine to enter into competition with the Company, the Company's
prospects could be adversely affected. The Company presently carries key-man
life insurance on its Chief Executive Officer, Joel Freedman, and its Chairman
of the Board and Chief Operating Officer, Frank Falco.
Dependence on Temporary Labor. As a result of the national and
international scope of the Company's operations, the Company is typically
required to staff jobs at least partially with temporary workers hired on
location. While all of the Company's jobs are performed under the supervision
and direction of the Company's supervisors and foremen and the Company attempts
to utilize as many of the Company's full time laborers as possible to staff
jobs, the location and other factors effecting jobs performed away from the
immediate vicinity of the Company's headquarters result in the Company regularly
hiring temporary workers on site. The Company carefully reviews the training and
qualifications of all temporary workers hired to assure that all such personnel
are qualified to perform the work in question. However, due to the temporary
nature of such employment, there is no assurance that all such temporary workers
will perform at levels acceptable to the Company and its customers. Accordingly,
the Company may experience difficulties in satisfactorily performing jobs and,
in some cases, may be exposed to certain liabilities as a result of the acts or
performance of such temporary workers. Additionally, in some locations, the
Company may be required to hire unionized temporary labor. The hiring of such
unionized workers may give rise to various other considerations affecting the
performance of jobs, including possible work stoppages and varying wage and
benefit demands, among others.
Seasonality of Business. While the Company provides its services on a
year-round basis, certain aspects of the Company's business display seasonal
characteristics. In particular, Company services provided outdoors or outside of
a sealed environment may be adversely affected by inclement weather conditions,
particularly in the northeast. Accordingly, extended periods of rain, cold
weather or other inclement weather conditions may result in delays in commencing
or completing projects, in whole or in part. Any such delays may adversely
effect the Company's operations and profitability and may adversely effect the
performance of other projects due to scheduling and staffing conflicts.
Working Capital and Additional Financing Requirements. The Company requires
substantial working capital to support its ongoing operations. As is common in
the environmental services industry, payment for services rendered by the
Company are generally received pursuant to specific draw schedules after
services are rendered. Thus, pending the receipt of payments for services
rendered, the Company must typically fund substantial project costs, including
significant labor and bonding costs, from financing sources within and outside
of the Company.
The Company historically relied heavily on bank financing to fund its
operations. With the consummation of the Company's initial public offering, the
Company has financed its operations internally without utilizing any substantial
new lines of credit. Because of expenditures relating to the opening of new
offices to serve strategic growth markets and other infrastructure expenditures
to support growth, the Company experienced working capital shortages during the
third quarter of 1995 and the first quarter of 1997. As a result of such working
capital shortages, the Company was required to raise additional capital through
the sale of $5 million of convertible notes in September of 1995 and through the
sale of $3 million of Series B Preferred Shares in February of 1997. There is no
assurance that the Company will not require additional financing in the future.
While the Company intends to seek any bank or other financing which may be
required in the future, no such source of potential financing has been
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identified and there is no assurance that any such financing will available on
terms acceptable to the Company, or at all, if needed.
Susceptibility to Inventory Related Losses. As a part of the Company's
surplus equipment operations, the Company regularly purchases surplus equipment
from its customers in connection with the performance of services, as well as
from third parties. Because of the nature of most of the equipment purchased,
most of such equipment is not covered by documents of title. While the Company
receives invoices from the sellers of such equipment, there is no assurance that
creditors and other third parties may not assert claims to ownership or other
rights in some of such equipment from time to time. Management, however, is not
aware of any instances where such claims have arisen in the past and believes
that the Company has good title to all of its inventory of surplus equipment.
In addition to the risk of possible third party claims to the Company's
inventory of surplus equipment, because of the nature of such equipment and the
cost of acquiring, transporting and storing such equipment, the Company often
enters into joint venture arrangements whereby the Company will acquire a fifty
percent interest in surplus equipment with the equipment being held at the joint
venture partner's site pending the sale of such equipment. Such joint venture
arrangements often involve limited, or no, documentation. Accordingly, the
Company may have surplus equipment inventory in many locations throughout the
United States and, in some instances, foreign countries and much of such
inventory may not be under the Company's direct control. While management is not
aware of any material inventory losses to date, because of the above inventory
practices, the Company's inventory does not lend itself to typical inventory
control procedures, thus increasing the possibility of inventory loss, theft or
fraud.
While the Company has substantially reduced its ongoing exposure and
activities in the surplus equipment market with its entry into a joint marketing
relationship with, and sale of substantially all of its surplus equipment
inventory to, Universal Process Equipment Company ("UPE"), the Company may
continue to be exposed to certain inventory risks should claims arise in the
future with respect to equipment previously sold by the Company.
Possible Liability in Connection with Legal and Administrative Proceedings.
The Company is periodically subject to lawsuits and administrative proceedings
arising in the ordinary course of its business. Included in such proceedings are
periodic administrative proceedings initiated by various environmental
regulatory agencies. In 1992, the Company was notified by the EPA of alleged
violations relating to the handling of asbestos containing materials. During
1994, the Company paid a $195,000 fine in settlement of such allegations without
any final determination or admission of liability. Similarly, in 1995, the
Company agreed to settle a complaint filed by the EPA in another asbestos
related proceeding. The Company and the EPA agreed to settle such matter without
any finding or admission of liability with the Company agreeing to pay $18,500.
The Company is presently a party to an ongoing administrative proceeding in
which the Occupational Safety and Health Administration has proposed to assess a
penalty against the Company in the amount of $147,000 as a result of the
accidental death of an employee of a subcontractor. On February 11, 1997, the
Company was served with a lawsuit naming the Company as a co-defendant in a
wrongful death cause of action arising out of the accidental death of an
employee of a subcontractor. The suit, styled The Estate of Percey L. Richard,
and Percey D. Richard, a minor by next of friend Patricia Cunningham v. American
Wrecking Corp. and its successors, IDM Environmental Corp. and its successors,
SECO Corp. and its successors, all joint and individually, and all unknown
persons, Case No. 2:97CV filed in the Federal District Court for the Northern
District of Indiana is based on the same facts as gave rise to the above
referenced administrative proceeding instituted by the Occupational Safety and
Health Administration. Management believes that the suit, as it relates to the
Company, is without merit, and intends to vigorously contest the cause of
action.
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In addition to potential liability in connection with the Company's
performance of services, the Company is presently a defendant in a shareholder
action filed in November of 1996 in New Jersey Superior Court styled Goldberg v.
IDM Environmental Corp., Docket No. L-11783-96. The plaintiff in that cause of
action has alleged that the Company made certain fraudulent misrepresentations
to the detriment of the investing public and that certain officers of the
Company were unjustly enriched as a result of their sales of common stock during
period in question. Management believes the cause of action is without merit and
intends to vigorously contest such cause of action. Any liability which may
arise from the cause of action, including costs of defending such cause of
action are covered under the Company's general liability insurance policy
subject to a $200,000 deductible. Notwithstanding management's belief that the
cause of action is without merit and the existence of insurance coverage, the
Company will be liable for costs of defending said cause of action to the extent
of the deductible and any damages awarded, in the event an adverse judgment is
rendered, in excess of the Company's liability insurance coverage. There can be
no assurance that this litigation will not have a material adverse effect on the
Company.
In April of 1997, the Company and its subsidiary, Global Waste & Energy,
Inc., were named as co- defendants in a cause of action styled Continental Waste
Conversion Inc. v. IDM Environmental Corp., Global Waste & Energy, Inc., et al,
filed in the Court of Queen's Bench of Alberta, Judicial District of Calgary
(Action No. 9701 04774). The plaintiff, Continental Waste ("CWC"), has alleged
that the license granted to the Company to utilize and market CWC's proprietary
gasification technology was granted without proper corporate authority due to
the lack of shareholder approval. The plaintiff has asserted the subsequent
employment by Global Waste & Energy of two former officers of CWC as a basis for
its allegations. CWC is seeking to have the license and all other agreements
between CWC and the Company declared null and void in addition to seeking
damages for alleged lost profits and other amounts. The Company believes the
suit is without merit and intends to vigorously contest the cause of action.
While the Company has been able to settle all prior legal and
administrative proceedings on terms believed to be acceptable to and in the best
interests of the Company, there is no assurance that the Company will not be
subject to legal and administrative proceedings in the future which may
materially adversely effect the Company.
Control by Management. Officers and directors of the Company, principally,
Messrs. Freedman and Falco, own an aggregate of approximately 8.6% of the issued
and outstanding shares of common stock as of April 1, 1997. Shareholders of the
Company do not have cumulative voting rights and, accordingly, each shareholder
is entitled to cast one vote per share held on all matters submitted to a vote
of shareholders, including the election of directors. Thus, shareholders holding
a majority of the outstanding shares will be able to elect all of the directors.
Further, Messrs. Freedman and Falco have entered into a Voting Agreement
pursuant to which each has agreed to vote for the other in all elections of
directors and, with respect to all other matters, they have agreed to vote as a
block.
Related Party Transactions and Possible Conflicts of Interest. The Company
has been controlled, and may continue to be controlled, by Joel Freedman and
Frank Falco, its principal shareholders, and has periodically engaged in
transactions with Messrs. Freedman and Falco and entities controlled by Messrs.
Freedman and Falco. During 1994, 1995 and 1996, the Company paid certain
personal expenses on behalf of Messrs. Freedman and Falco, which advances were
originally made on an unsecured non-interest bearing basis without definite
repayment terms. Interest on such loans began to accrue at 7% per annum
commencing in June of 1995. Mr. Freedman surrendered 36,621 shares of Common
Stock as payment in full of $192,260, representing all amounts owed by Mr.
Freedman to the Company, including excess draws under his employment agreement,
in September of 1995. In April of 1996, Mr. Falco surrendered 92,214 shares of
Common Stock as payment in full of $670,580 representing all amounts owed by Mr.
Falco to the Company as at such date, including excess draws under his
employment agreement. At December 31, 1996, Mr. Falco owed a total of
approximately $201,000 to the Company. The Company presently leases its
principal facilities from a partnership controlled by Messrs. Freedman and Falco
9
<PAGE>
and, in 1995, performed certain construction work to expand such facilities.
Additionally, the Company previously loaned funds to such partnership in order
to construct certain leasehold improvements on the Company's premises and for
various other purposes. While the loan to the partnership had been repaid in
full through periodic offsets against the lease payments owed by the Company to
the partnership, no formal terms for repayment of such loan were ever
established and no interest was paid on such loan. Further, while the Company
obtained an appraisal of the fair rental value of the leased premises and
management believes the terms of such lease to be fair, there is no assurance
that the Company could not obtain more favorable terms if dealing with third
parties. Any current or future transactions between the Company and such
affiliates may involve possible conflicts of interest.
Possible Issuance of Substantial Amounts of Additional Shares Without
Shareholder Approval. At December 31, 1996, the Company had an aggregate of
approximately 4,615,732 shares of Common Stock authorized but unissued and not
reserved for specific purposes and an additional 5,881,538 shares of Common
Stock unissued but reserved for issuance pursuant to (i) the Company's 1993 and
1995 Incentive Stock Option Plans, (ii) exercise of outstanding Class A Warrants
issued in the Company's initial public offering, (iii) exercise of nonqualified
options issued in connection with consulting services, and (iv) exercise of
warrants issued in connection with the placement of the Series B Preferred
Shares. Additionally, an as yet undetermined number of shares of Common Stock
equal to up to fifteen percent (15%) of the then outstanding shares of Common
Stock will be issued to Messrs. Freedman and Falco if certain earnings criteria
are satisfied. All of such shares may be issued without any action or approval
by the Company's shareholders. Although there are no other present plans,
agreements, commitments or undertakings with respect to the issuance of
additional shares, or securities convertible into any such shares by the
Company, any shares issued would further dilute the percentage ownership of the
Company held by the public shareholders.
Possible Issuance of Preferred Stock and Superior Rights of Preferred
Stock. In addition to the above referenced shares of Common Stock which may be
issued without shareholder approval, the Company has 1,000,000 shares of
authorized preferred stock. The Company presently has 300 shares of Series B
Preferred Stock issued and outstanding and has reserved a total of 200,000
shares for issuance pursuant to a Share Rights Plan adopted by the Company in
1996. Prior to the distributions of any amounts to the holders of Common Stock,
whether as dividends or on liquidation, the holders of outstanding preferred
stock must have received their cumulative dividend or liquidation preference, as
appropriate. While the Company has no present plans to issue any additional
shares of preferred stock, other than shares which may be issued in the event
the Company's Share Rights Plan is triggered, the Board of Directors has the
authority, without shareholder approval, to create and issue one or more series
of such preferred stock and to determine the voting, dividend and other rights
of holders of such preferred stock. The issuance of any of such series of
preferred stock could have an adverse effect on the holders of Common Stock.
Shares Eligible for Future Sales. All of the shares of the Company's Common
Stock owned by non-public shareholders are "restricted securities" as that term
is defined under Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Act") and may only be sold pursuant to a registered offering or in
accordance with applicable exemptions from the registration requirements of the
Act. Rule 144 provides for the sale of limited quantities of restricted
securities without registration under the Act. In general, under Rule 144 a
person (or persons whose shares are aggregated) who has satisfied a one (1) year
holding period may, under certain circumstances, sell within any three (3) month
period, a number of shares which does not exceed the greater of one percent (1%)
of the then outstanding shares of common stock or the average weekly trading
volume during the four (4) calendar weeks prior to such sale. Rule 144(k) also
permits, under certain circumstances, the sale of shares without any quantity
limitation by a person who is not an affiliate of the Company and who has
satisfied a two (2) year holding period. The Company is unable to predict the
effect that future sales under Rule 144 may have on the then prevailing market
price of Common Stock. It can be expected, however, that the sale of any
substantial number of shares of Common Stock will have a depressive effect on
the market price of the Common Stock.
10
<PAGE>
No Dividends. The Company has not declared or paid, and does not anticipate
declaring or paying in the foreseeable future, any cash dividends on its Common
Stock. The Company's ability to pay dividends is dependent upon, among other
things, future earnings, the operating and financial condition of the Company,
its capital requirements, general business conditions and other pertinent
factors, and is subject to the discretion of the Board of Directors. Further, as
noted above, no distributions may be made with respect to the Company's Common
Stock unless all cumulative dividends with respect to outstanding preferred
stock, if any, have been paid. Accordingly, there is no assurance that any
dividends will ever be paid on the Company's Common Stock.
SELLING STOCKHOLDERS
The Selling Stockholders are certain persons who have provided equity
financing to the Company through the purchase of Series B Preferred Shares. The
shares of Common Stock covered by this Prospectus are being registered so that
the Selling Stockholders may offer the shares for resale from time to time. See
"Plan of Distribution." Except as described below, none of the Selling
Stockholders has had a material relationship with the Company within the past
three years other than as a result of the ownership of the Series B Preferred
Shares or the Common Stock issuable pursuant to the conversion of, or dividends
on, the Series B Preferred Shares.
The following table sets forth the names of the Selling Stockholders, the
number of shares of Common Stock owned beneficially by each of the Selling
Stockholders as of June 2, 1997, and the number of shares which may be offered
for resale pursuant to this Prospectus. For the purposes of calculating the
number of shares of Common Stock beneficially owned by the Selling Stockholders,
the number of shares of Common Stock calculated to be issuable in connection
with the conversion of the Series B Preferred Shares is based on a conversion
price that is derived from the average closing bid price of the Common Stock on
the five trading days preceding June 2, 1997 (which was $1.74375).
The information included below is based upon information provided by the
Selling Stockholders. Because the Selling Stockholders may offer all, some or
none of their Common Stock, no definitive estimate as to the number of shares
thereof that will be held by the Selling Stockholders after such offering can be
provided and the following table has been prepared on the assumption that all
shares of Common Stock offered under this Prospectus will be sold.
Shares of Shares of
Common Stock Shares of Common Stock
Beneficially Common Stock Owned After
Name Owned(1)(2)(3) Offered Offering (1)
---- --------------- ------------ ------------
Euro Factors International, Inc.. 699,362 699,362 -0-
FTS Worldwide Corporation........ 699,362 699,362 -0-
Beauchamp Finance Ltd............ 349,681 349,681 -0-
Mitreco International, Inc....... 349,681 349,681 -0-
--------- --------- -----
2,098,086 2,098,086 -0-
- ------------------------
(1) Unless otherwise indicated in the footnotes to this table, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property
laws where applicable.
(2) As required by regulations of the Commission, the number of shares shown as
beneficially owned includes shares which can be purchased within 60 days
after June 2, 1997. The actual number of shares of Common Stock
beneficially owned is subject to adjustment and could be materially less or
more than the estimated amount indicated depending upon factors which
cannot be predicted by the Company at this time, including, among others,
the market price of the Common Stock prevailing at the actual date of
conversion of the Series B Preferred Shares, and whether or to what extent
dividends to the holders of the Series B Preferred Shares are paid in
Common Stock.
11
<PAGE>
(3) The listed Selling Stockholders hold an aggregate of 300 Series B 7%
Convertible Preferred Shares which are convertible into shares of Common
Stock. The Series B Preferred Shares were issued by the Company in a
private placement in February 1997 for $10,000 per share. The Series B
Preferred Shares are convertible commencing May 14, 1997, in whole or in
part, at the option of the holder. Each Series B Preferred Share is
convertible at a rate of $10,000 divided by the lesser of (i) $2.67 or 82%
of the average closing bid price of the Common Stock over the five
trading-day period preceding conversion for conversions occurring between
May 14, 1997 and June 12, 1997, (ii) $2.4475 or 79% of the average closing
bid price of the Common Stock over the five trading-day period preceding
conversion for conversions occurring between the June 13, 1997 and July 12,
1997, (iii) $2.225 or 76% of the average closing bid price of the Common
Stock over the five trading-day period preceding conversion for conversions
occurring between July 13, 1997 and August 11, 1997, and (iv) $2.225 or 73%
of the average closing bid price of the Common Stock over the five
trading-day period preceding conversion for conversions occurring on or
after August 12, 1997. The conversion price is adjusted, and the number of
shares beneficially owned by the Selling Stockholders will vary
accordingly, to reflect stock dividends, stock splits and in certain
instances other circumstances. Conversion of the Series B Preferred Shares
is subject to the issuance of a maximum of 1,915,000 shares of Common Stock
on conversion unless the shareholders of the Company have approved issuance
beyond that level upon conversion. In the absence of shareholder approval
of issuances above 1,915,000 shares, all Series B Preferred Shares
remaining outstanding if and when 1,915,000 shares have been issued will be
subject to mandatory redemption by the Company at $11,000 per share.
Further, the Company has the right, upon notice to the holders, to redeem
for $12,200 per share any Series B Preferred Shares submitted for
conversion at a price of $1.80 or less. The number of shares shown as being
offered in the table is based on the assumed conversion of the 300 Series B
Preferred Shares at a hypothetical conversion price of $1.429875 per share
(which is the conversion price based on the average closing bid price of
$1.74375 on the five trading days ended June 2, 1997) and assumes payment
of dividends on the Series B Preferred Shares in cash. The Series B
Preferred Shares pay a 7% dividend payable on conversion or at redemption
in cash or Common Stock, at the Company's option. All Series B Preferred
Shares remaining outstanding on February 12, 2000 shall be automatically
converted into Common Stock. For a further description of the rights of
holders of the Series B Preferred Shares, see the Certificate of
Designations, Preferences and Rights filed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
PLAN OF DISTRIBUTION
The Company is registering the shares of Common Stock offered by the
Selling Stockholders hereunder pursuant to contractual registration rights.
The shares of Common Stock offered hereunder may be sold from time to time
by the Selling Stockholders, or by pledgees, donees, transferees or other
successors in interest. Such sales may be made on the Nasdaq National Market or
in the over-the-counter market or otherwise at prices and on terms then
prevailing or related to the then current market price, or in negotiated
transactions. The shares of Common Stock may be sold to or through one or more
broker-dealers, acting as agent or principal in underwritten offerings, block
trades, agency placements, exchange distributions, brokerage transactions or
otherwise, or in any combination of transactions.
In connection with any transaction involving the Common Stock,
broker-dealers or others may receive from the Selling Stockholders, and may in
turn pay to other broker-dealers or others, compensation in the form of
commissions, discounts or concessions in amounts to be negotiated at the time.
Broker-dealers and any other person participating in a distribution of the
Common Stock may be deemed to be "underwriters" within the meaning of the Act in
connection with such distribution, and any such commissions, discounts or
concessions may be deemed to be underwriting discounts or commissions under the
Act.
12
<PAGE>
Any or all of the sales or other transactions involving the Common Stock
described above, whether effected by the Selling Stockholders, any broker-dealer
or others, may be made pursuant to this Prospectus. In addition, any shares of
Common Stock that qualify for sale pursuant to Rule 144 under the Act may be
sold under Rule 144 rather than pursuant to this Prospectus.
To comply with the securities laws of certain states, if applicable, the
Common Stock may be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, shares of Common Stock may not be sold
unless they have been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied with
under applicable state securities laws.
The Company and the Selling Stockholders have agreed, and hereafter may
further agree, to indemnify each other and certain persons, including
broker-dealers or others, against certain liabilities in connection with any
offering of the Common Stock, including liabilities arising under the Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Vanderkam &
Sanders, of Houston, Texas.
EXPERTS
The consolidated financial statements of IDM appearing in the IDM
Environmental Corp. Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, have been audited by Samuel Klein and Company, independent
certified public accountants, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is a list of the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being registered
hereby, all of which are payable by the Company, other than underwriting
discounts and commissions.
Registration Fee............................. $ 2,400.91
Accountants' Fees and Expenses............... 3,000.00
Legal Fees and Expenses...................... 20,000.00
Miscellaneous................................ 4,599.09
----------
Total..................................... $30,000.00
==========
Item 15. Indemnification of Directors and Officers
The Company's Articles of Incorporation, as amended, eliminate the personal
liability of directors to the Company or its stockholders for monetary damages
for breach of fiduciary duty to the extent permitted by New Jersey law. The
Company's Bylaws provide that the Company shall indemnify its officers and
directors to the extent permitted by the Business Corporation Act of the State
of New Jersey. Section 14A:3-5 of the New Jersey Business Corporation Act
authorizes a corporation to indemnify directors, officers, employees or agents
of the corporation in non-derivative suits if such party acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interest
of the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful, as determined in
accordance with New Jersey law. Section 14A:3-5 further provides that
indemnification shall be provided if the party in question is successful on the
merits or otherwise.
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its shareholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty, which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director, or for violations of the federal securities laws.
The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. The Company currently provides such insurance to its directors.
The provisions also limit or indemnify against liability resulting from
grossly negligent decisions including grossly negligent business decisions
relating to attempts to change control of the Company.
II-1
<PAGE>
Item 16. Exhibits
4.1* Certificate of Designations, Voting Powers, Preferences and Rights of
Series B 7% Convertible Preferred Stock
5.1 Opinion and consent of Vanderkam & Sanders re: the legality of the
shares being registered
23.1 Consent of Vanderkam & Sanders (included in Exhibit 5.1)
23.2 Consent of Samuel Klein and Company
24.1 Power of Attorney (included on page II-3)
- ------------------------
* Incorporated by reference to the respective exhibits filed with the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The registrant hereby undertakes:
(1) (i) To include any prospectus required by Section 10(a)(3) of the Act;
(ii)To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iiiTo 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 these
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the 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's 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 herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of South River, State of New Jersey on the 30th day of
May, 1997.
IDM ENVIRONMENTAL CORP.
By: /s/ Joel Freedman
------------------------------------------
JOEL FREEDMAN, President
Each of the undersigned officers and directors of IDM Environmental Corp.
hereby constitutes and appoints Joel Freedman and Frank Falco, and each of them
singly, as true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, 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 this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and to prepare any and all exhibits thereto,
and other documents in connection therewith, and to make any applicable state
securities law or blue sky filings, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done to enable IDM
Environmental Corp. to comply with the provisions of the Securities Act of 1933,
as amended, and all requirements of the Securities and Exchange Commission, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
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 date indicated.
Signatures Title Date
---------- ----- ----
/s/ Joel A. Freedman President, Chief Executive Officer May 30, 1997
- ------------------------ and Director (Principal Executive
JOEL A. FREEDMAN Officer)
/s/ Frank A. Falco Chairman of the Board, Chief Operating May 30, 1997
- ------------------------ Officer, Executive Vice President and
FRANK A. FALCO Director
/s/ Michael B. Killeen Treasurer and Chief Financial Officer May 30, 1997
- ------------------------ (Principal Financial and Accounting
MICHAEL B. KILLEEN Officer)
Director May , 1997
- ------------------------
MORI AARON SCHWEITZER
Director May , 1997
- ------------------------
FRANK PATTI
/s/ Robert McGuinness Director May 30, 1997
- ------------------------
ROBERT MCGUINNESS
II-3
June 3, 1997
IDM Environmental Corp.
396 Whitehead Avenue
South River, New Jersey 08882
Re: Form S-3 Registration Statement
Gentlemen:
You have requested that we furnish you our legal opinion with respect to
the legality of the following described securities of IDM Environmental Corp.
(the "Company") covered by a Form S-3 Registration Statement, as amended through
the date hereof (the "Registration Statement"), filed with the Securities and
Exchange Commission for the purpose of registering such securities under the
Securities Act of 1933:
1. 3,000,000 shares of common stock, $.001 par value (the "Shares")
issuable upon conversion of, or otherwise with respect to, 300 shares
of Series B 7% Convertible Preferred Stock (the "Series B Preferred
Shares").
In connection with this opinion, we have examined the corporate records of
the Company, including the Company's Articles of Incorporation, Bylaws, and the
Minutes of its Board of Directors and Shareholders meetings, the Series B
Preferred Shares, the Registration Statement, and such other documents and
records as we deemed relevant in order to render this opinion.
Based on the foregoing, it is our opinion that, after the Registration
Statement becomes effective and the Shares have been issued and delivered as
described therein, the Shares will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion with Securities and
Exchange Commission as an exhibit to the Registration Statement and further
consent to statements made therein regarding our firm and use of our name under
the heading "Legal Matters" in the Prospectus constituting a part of such
Registration Statement.
Sincerely,
VANDERKAM & SANDERS
CONSENT OF SAMUEL KLEIN AND COMPANY, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of IDM Environmental
Corp. for the registration of 3,000,000 shares of its common stock and to the
incorporation by reference therein of our report dated April 4, 1997, with
respect to the consolidated financial statements of IDM Environmental Corp.
included in its Annual Report on Form 10-K for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.
SAMUEL KLEIN AND COMPANY
Newark, New Jersey
May 13, 1997
