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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION JANUARY 21, 1997
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BOYDS WHEELS, INC.
(Name of small business issuer in its charter)
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CALIFORNIA 93-1000272
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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8380 CERRITOS AVENUE
STANTON, CALIFORNIA 90680
(714) 952-4038
(Address and telephone number of principal executive offices
and principal place of business)
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BOYD CODDINGTON
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BOYDS WHEELS, INC.
8380 CERRITOS AVENUE
STANTON, CALIFORNIA 90680
(714) 952-4038
(Name, address and telephone number of agent for service)
Copy to:
CURT C. BARWICK, ESQ.
HIGHAM, MCCONNELL & DUNNING
28202 CABOT ROAD, SUITE 450
LAGUNA NIGUEL, CALIFORNIA 92677
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COUNSEL FOR THE COMPANY
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE FEE
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Common Stock, no par value 1,019,565 Shares(1) $13,570,410(2) $13,570,410(2) $4,112
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(1) Includes 229,295 shares issuable upon the exercise of options and warrants.
(2) These figures are estimates made solely for the purpose of calculating the
registration fee pursuant to Rule 457(c). The average of the bid and asked
prices for the Common Stock on January 17, 1997 was $13.31, as reported on
the NASDAQ National Market System.
THE REGISTRANT HEREBY AMENDS THE 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
1,019,565 SHARES OF COMMON STOCK (NO PAR VALUE)
BOYDS WHEELS, INC.
This Prospectus relates to 1,019,565 shares of the Company's Common
Stock, no par value ("Common Stock"), heretofore issued or issuable upon the
exercise of warrants or options, to the persons listed as the Selling
Shareholders. Such shares of Common Stock are being offered for the respective
accounts of the Selling Shareholders, and will be sold from time to time by the
Selling Shareholders in the national over-the- counter market or otherwise at
their prevailing prices, or in negotiated transactions. Of the 1,019,565
shares of Common Stock being offered, 229,295 shares will be issued upon the
exercise of warrants and options. The Company will receive no proceeds from
the sale of such shares of Common Stock by the Selling Shareholders. The
expenses of preparing and filing the Registration Statement of which this
Prospectus forms a part are being paid by the Company.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGE 5 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The shares offered hereby were acquired by the Selling Shareholders
from the Company in private transactions and are "restricted securities" under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
has been prepared for the purpose of registering the shares under the Act to
allow for future sales by the Selling Shareholders to the public without
restriction. To the knowledge of the Company, the Selling Shareholders have
made no arrangement with any brokerage firm for the sale of the shares. The
Selling Shareholders may be deemed to be "underwriters" within the meaning of
the Securities Act. Any commissions received by a broker or dealer in
connection with resales of the shares may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution."
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
The Common Stock is traded on the NASDAQ National Market ("NASDAQ")
under the symbol "BYDS." On January 17, 1997, the bid and asked prices per
share, as reported by NASDAQ, were $13.625 and $13.00 respectively.
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The date of this Prospectus is January 21, 1997
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING CONTEMPLATED HEREBY, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities
and Exchange Commission. Reports, proxy statements and other information filed
by the Company with the Securities and Exchange Commission may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: 75 Park Place, New York, New York 10007; and the
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60621; and copies of such material may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W. Judiciary Plaza,
Washington, D.C. 20549 at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Securities and Exchange Commission and are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995;
(b) The Company's Quarterly Report on Form 10-QSB for the period
ended March 31, 1996;
(c) The Company's Quarterly Report on Form 10-QSB for the period
ended June 30, 1996;
(d) The Company's Quarterly Report on Form 10-QSB for the period
ended September 30, 1996;
(e) The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed with the Securities and Exchange
Commission on or about September 15, 1995 pursuant to Section 12(g) of the
Exchange Act, together with all amendments or reports filed for the purpose of
updating such description.
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 of Common Stock offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated 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.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been incorporated into this Prospectus
by reference (other than exhibits to such documents). Requests for such copies
should be directed to Rex Ours, Chief Financial Officer, Boyds Wheels, Inc.,
8380 Cerritos Avenue, California 90680 (Telephone: 714/952-4038).
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TABLE OF CONTENTS
<TABLE>
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The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 10
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . 11
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Description of Securities . . . . . . . . . . . . . . . . . . . . . 13
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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THE COMPANY
Boyds Wheels, Inc. (the "Company") designs, manufactures and markets
high quality aluminum wheels for the specialty automotive aftermarket. In
addition to its premium aluminum wheels, the Company designs, manufactures and
markets motorcycle wheels, steering wheels for automobiles, automotive and
motorcycle billet aluminum accessories and also sells car care products under
its own label. The Company's products utilize machined aluminum materials and
unique designs which the Company believes enhance individuality of vehicle
styling. The Company sells its products domestically through a national
distribution network of tire and performance retailers, warehouse distributors
and mail order outlets, and internationally through foreign distribution
channels.
The Company was founded in 1988 by Boyd Coddington in response to
consumer demand for billet aluminum wheels similar to those featured on custom
hot rod vehicles designed and manufactured by Hot Rods by Boyd, a wholly-owned
subsidiary which has been recognized as a leading designer, manufacturer and
marketer of custom vehicles and hot rods. From 1978 until 1996, Hot Rods by
Boyd, which has built vehicles that have been featured in many automotive and
general interest publications, including Car and Driver, Autoweek, Hot Rod,
Smithsonian and Forbes, was owned and operated by Mr. Coddington as a separate
company. On or about December 31, 1996, the Company exercised an option and
acquired Hot Rods by Boyd, given its belief that Hot Rods by Boyd is a key
factor in maintaining and enhancing the image and brand name recognition of the
Company's products. The Company had previously entered into a
marketing/promotion agreement with Hot Rods by Boyd pursuant to which Hot Rods
by Boyd is required to endorse, promote and market the Company's products as
the "official wheel" of Hot Rods by Boyd, use the Company's wheels on vehicles
produced by Hot Rods by Boyd and permit the Company to use these vehicles for
promotional displays and photographs. The acquisition of Hot Rods by Boyd
solidifies this relationship.
The custom wheel market is the second largest segment of the specialty
automotive aftermarket. The custom wheel market is generally divided into five
product categories: aluminum wheels, composite wheels, modular wheels, steel
wheels and custom wheel accessories. According to Specialty Equipment Market
Association ("SEMA"), aluminum wheels are the largest segment of this market,
accounting for more than 75% of total sales. SEMA reports that the custom
wheel industry has grown from sales of approximately $525 million in 1992 to
$650 million in 1994. The Company believes that this industry grew at
approximately 10% in 1995 and will continue to grow at that rate for 1996. The
Company further believes that consumer desire for individuality in vehicle
appearance will contribute to the Company's growth since custom wheels
represent one of the easiest, least expensive and quickest ways to dramatically
alter the appearance of a vehicle.
The Company's strategy is to expand its position as a leading marketer
of premium automotive/motorcycle aftermarket products by capitalizing on
consumer recognition of the "Boyds" brand name and the Company's growing
distribution network. The Company intends to implement this strategy by (i)
leveraging and strengthening its premium brand name recognition, (ii) creating
selected new product lines in order to build its customer loyalty into a
broader based business, (iii) differentiating its products from its competition
by continually identifying and introducing trend setting designs, (iv)
diversifying domestic product distribution by penetrating new geographic areas
and targeting key distributors to service its customer and consumer markets and
(v) expanding the Company's penetration into international markets by
establishing relationships with selected distributors in Europe and the Pacific
Rim.
The Company was incorporated in California in April 1988. The
principal executive offices of the Company are located at 8380 Cerritos Avenue,
Stanton, California 90680. The Company's telephone number is (714) 952-4038.
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RISK FACTORS
THE SECURITIES WHICH ARE OFFERED HEREBY ARE SPECULATIVE IN NATURE,
INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE PURCHASED BY PERSONS WHO CAN AFFORD
TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CONSIDER
CAREFULLY THE FOLLOWING FACTORS INHERENT IN AND AFFECTING THE BUSINESS OF THE
COMPANY, IN ADDITION TO THE INFORMATION CONCERNING THE COMPANY AND ITS BUSINESS
CONTAINED IN THIS PROSPECTUS, BEFORE PURCHASING THE SECURITIES OFFERED HEREBY.
DEPENDENCE ON KEY CUSTOMERS
Typically a limited number of customers have accounted for a
substantial portion of the Company's revenues. In 1995, the Company's ten
largest customers accounted for approximately 82.4% of net sales, with four
accounting for greater than 10% each: Wheel City at 24.1%, Ousyu Hambi Co. Ltd.
("American Motoring Accessories") at 16.7%, Moon of Japan, Ltd. ("Mooneyes")
at 15.6% and American Racing Equipment, Inc. ("American Racing") at 12.0%. In
1994, the Company's ten largest customers accounted for approximately 84.6% of
net sales, with three accounting for greater than 10% each: American Racing at
25.2%, Mooneyes at 15.5% and Wheel City at 12.3%. The Company does not have
any long-term contractual relationships with its major customers. The loss of
or any material reduction in orders by any of such customers, including
reductions due to market, economic or competitive pressures in the automotive
aftermarket industry, could adversely affect the Company's business, financial
condition and results of operations. The Company's ability to maintain or
increase its sales levels in the future will depend in part upon its ability to
obtain orders from new customers as well as the financial condition and success
of its current customers and the general economy. There can be no assurance
that the Company will be able to maintain or continue to increase the level of
its sales in the future or that the Company will be able to retain existing
customers or attract new customers.
COMPETITION
The market for the Company's products is highly competitive and is
based primarily on price, product selection, product availability and service.
Many of the Company's competitors have substantially greater financial and
other resources than the Company and may offer lower prices on competing
products. The Company also competes with dealers and distributors who may
offer their own branded products at prices below those offered by the Company.
A key competitive factor among suppliers of automotive aftermarket products is
the ability to promptly deliver products to dealers and distributors and,
accordingly, even smaller regional companies may be able to compete effectively
against the Company. Increased competition could result in product price
reductions, reduced margins and loss of market share, all of which could have a
material adverse effect on the Company's results of operations and financial
condition. While the Company believes its prices are competitive for the
quality level of its products, the Company relies primarily on its reputation
for selling quality products supported by strong customer service. There can
be no assurance that the Company will be able to compete successfully in the
future with its competitors. Furthermore, the custom aluminum wheel business
has been characterized by widespread imitation of popular designs. The Company
must, therefore, continually strive to develop new designs to differentiate its
products from those of its competitors. There can be no assurance that the
Company will continue to develop sufficient new designs and any failure to do
so could have a material adverse effect on its results of operations and
financial condition.
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CHANGING CONSUMER TRENDS
The Company's success depends substantially on its ability to correctly
and consistently anticipate, gauge and respond in a timely manner to rapidly
changing consumer preferences. The Company attempts to minimize the risks
relating to changing consumer trends by offering a wide variety of product
styles, analyzing consumer purchases, maintaining an active product development
effort and monitoring sales of its products. However, any misjudgment by the
Company of the market for a particular product, or its failure to correctly
anticipate consumer preferences, could have a material adverse impact on its
results of operations and financial condition.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends, in large part, on the efforts and
abilities of Boyd Coddington, its founder, Chairman and Chief Executive
Officer. Under the terms of his employment agreement with the Company, Mr.
Coddington is not required to and does not expend his full time and attention
on the Company's activities and Mr. Coddington has other business interests
which require his time and attention. The Company does not maintain key man
life insurance on Mr. Coddington. The loss of the services of Mr. Coddington
would have a material adverse effect on the business of the Company. The
success of the Company will depend on, among other factors, the successful
recruitment and retention of quality management and personnel.
COST OF ALUMINUM AND DEPENDENCE ON THIRD PARTY SUPPLIERS
The Company purchases several types of aluminum, including billet
discs, billet bar stock, prime ingot and prefabricated outer rims from third
party suppliers for use in the manufacture of its products. Consequently, an
interruption in the supply or a significant increase in the price of aluminum
could have a material adverse effect on the Company's results of operations and
financial condition. There can be no assurance that such materials will be
delivered on a timely basis or on terms favorable to the Company. Should the
Company lose its present sources of supply for these materials, not be able to
obtain such materials on favorable terms or experience delays in receiving
them, a material adverse impact on the Company's results of operations and
financial condition may result. The Company believes, however, that
alternative sources of supply exist or can be developed. The Company
experienced significant rises in aluminum prices in 1994 and early 1995.
Although such prices have subsequently stabilized, there can be no assurance
that the Company will not experience significant rises in aluminum prices in
the future.
DEPENDENCE ON INTERNATIONAL SALES
A significant element of the Company's business strategy is to expand
into selected international markets, such as the recent introduction of its
products in Japan. In 1994 and 1995 and the first 3 quarters of 1996, the
Company derived approximately 26.3%, 39.3% and 21.4%, respectively, of its net
sales from international markets, substantially all of which were in Japan.
The Company's international sales efforts are subject to the customary risks of
doing business abroad, including exposure to regulatory requirements, political
and economic instability, barriers to trade, trade restrictions (including
import quotas), tariff regulations, foreign taxes, restrictions on transfer of
funds, difficulty in obtaining distribution and support and export licensing
requirements, any of which could have a material adverse effect on the
Company's operations. In addition, a weakening in the value of foreign
currencies relative to the U.S. dollar and potential fluctuations in foreign
currency exchange rates could have an adverse impact on the effective price of
the Company's products in its international markets.
ADVERSE EFFECT OF REDUCED DISCRETIONARY CONSUMER SPENDING
Purchases of specialty automotive aftermarket products are
discretionary for consumers. The success of the Company is influenced by a
number of economic factors affecting disposable income such as employment
levels, business conditions, interest rates and tax rates. Adverse changes in
these economic factors, among others, may cause consumers
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to reduce discretionary spending for the Company's products, thereby adversely
affecting the Company's results of operations and growth.
VARIABILITY IN QUARTERLY OPERATING RESULTS; SEASONALITY
The Company may experience significant fluctuations in future quarterly
operating results due to a number of factors including, among other things, the
size and timing of customer orders, delays in new product enhancements and new
product introductions, quality control difficulties, market acceptance of new
products, product returns, seasonality in product purchases by distributors and
end users and pricing trends in the automotive aftermarket industry in general
and in the specific markets in which the Company is active. Any of these
factors could cause quarterly operating results to vary significantly from
prior periods. Furthermore, the Company's business is seasonal in most
sections of the country, as the Company believes that it is affected by weather
conditions. Historically, the Company's net sales have been highest in the
second and third quarters of each year. However, the Company believes that
unusually adverse or otherwise poor weather conditions in the spring and summer
seasons may have a negative effect on the Company's sales in such quarters.
Significant variability in orders during any period may have an adverse impact
on the Company's cash flow or work flow, and any significant decrease in orders
could have a material adverse impact on the Company's results of operations and
financial condition.
PRODUCT CONCENTRATION
Substantially all of the Company's revenues are derived from sales of
aluminum automobile and motorcycle wheels. The Company anticipates that these
products will continue to account for a substantial portion of its sales in the
foreseeable future. A decline in the demand for these products, whether as a
result of competition or other factors, could have a material adverse effect on
the Company's results of operations and financial condition.
RISK OF DECLINING AVERAGE SELLING PRICES
The Company may face increasing pricing pressures from current and
future competitors and, accordingly, there can be no assurance that competitive
pressures will not require the Company to reduce its prices. In particular,
over time, the average selling prices for the Company's wheel products (which
currently represent a significant portion of the Company's revenues) may
decline as the market for these products becomes more competitive. Any
material reduction in the price of the Company's products would negatively
affect the Company's gross margin and would require the Company to increase
unit sales in order to maintain net sales.
MANAGEMENT OF COMPANY GROWTH; FUTURE CAPITAL REQUIREMENTS
The Company has experienced significant growth in recent years. This
growth will continue to make significant demands on the Company's management,
resources and operations. To manage its growth effectively, the Company
intends to continue to improve its operational, financial, sales and marketing
systems and to hire and train new employees and better manage its current
employees. The Company's failure to manage its growth effectively could have a
material adverse effect on the Company's results of operations and financial
condition.
To the extent that cash flow from operations is insufficient to fund
the Company's activities, the Company will be required to raise funds through
equity or debt financings. No assurance can be given that such financings will
be available on terms acceptable to the Company, if at all and, if available,
such financings may result in further dilution to the Company's shareholders
and in higher interest expense.
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RISK OF PRODUCT LIABILITY
The nature of the Company's business exposes it to risk from product
liability claims. The Company currently maintains product liability insurance
for its products worldwide, with limits of $5,000,000 per occurrence and
$5,000,000 in the aggregate, per annum. However, such coverage is becoming
increasingly expensive and there can be no assurance that the Company's
insurance will be adequate to cover future product liability claims, or that
the Company will be successful in maintaining adequate product liability
insurance at commercially reasonable rates. Any losses that the Company may
suffer from future liability claims, including the successful assertion against
the Company of one or a series of large uninsured claims in excess of the
Company's coverage, may have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, any
product liability litigation may have a material adverse effect on the
reputation and marketability of the Company's products. See "Business--Product
Warranties."
ENVIRONMENTAL COMPLIANCE
In the ordinary course of its manufacturing process, the Company uses
metals, oils and similar materials which are stored on-site. The waste created
by use of these materials is transported off-site on a regular basis by a
state-registered waste hauler. Although the Company is not aware of any claim
involving violation of environmental or occupational safety and health laws and
regulations, there can be no assurance that such a claim may not arise in the
future, which may have a material adverse effect on the Company.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of the Common Stock in the
public market following this offering could adversely affect the market price
of the Common Stock. Mr. and Mrs. Coddington previously hereto have agreed
pursuant to lock-up agreements that they will not, without the prior written
consent of Cruttenden Roth Incorporated, sell or otherwise dispose of
approximately 677,245 shares of Common Stock beneficially owned by them until
June 10, 1997, but may sell or otherwise dispose of up to 15,000 shares of
Common Stock per quarter commencing June 11, 1996. As of December 1, 1996,
approximately 106,000 shares became available for immediate sale in the public
market, subject to Rule 144. See "Selling Shareholders."
CONTROL BY EXISTING SHAREHOLDERS
The principal shareholders, directors and officers of the Company
beneficially own approximately 21.6% of the Company's outstanding voting
securities. Because of their stock ownership and positions with the Company,
these persons will be in a position to continue to control the affairs and
management of the Company. Such concentration of ownership and control may
have the effect of delaying, deferring or preventing a change in control of the
Company. See "Selling Shareholders" and "Description of Securities."
EFFECT OF PREFERRED STOCK ON RIGHTS OF COMMON STOCK
The Board of Directors of the Company is authorized to issue, from time
to time, without any action on the part of the Company's shareholders, up to
5,000,000 shares of Preferred Stock in one or more series, with such relative
rights, powers, preferences, limitations and restrictions as are determined by
the Board of Directors at the time of issuance. Accordingly, the Board of
Directors is empowered to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting
power or other rights of the holders of Common Stock. In the event of such
issuance, the Preferred Stock could be utilized, under either circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. See "Description of Securities--Preferred Stock."
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VOLATILITY OF STOCK PRICE; NO DIVIDENDS
The trading price of the Common Stock has been and is likely to
continue to be subject to significant fluctuations in response to variations in
quarterly operating results, the gain or loss of significant contracts, changes
in management, announcements of technological innovations or new products by
the Company or its competitors, legislative or regulatory changes, general
trends in the industry and other events or factors. In addition, the stock
market has experienced extreme price and volume fluctuations which have
affected the market price for many companies for reasons frequently unrelated
to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of the Company's Common
Stock. The Company currently intends to retain any future earnings for use in
its business and does not anticipate any cash dividends in the future. See
"Price Range for Common Stock and Dividend Policy."
DILUTION
The conversion of existing convertible notes or the exercise of
warrants and options may have a dilutive effect on the net tangible book value
of the Common Stock.
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus, including the documents incorporated herein by
reference, contain certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934 (the "Exchange Act") and the Company intends that such
forward-looking statements be subject to the safe harbors created thereby.
These forward-looking statements include the plans and objectives of management
for future operations, including plans and objectives relating to the products
and future economic performance of the Company. The forward-looking statements
and associated risks set forth in this Prospectus may include or relate to (i)
development of brand name recognition and loyalty to the Company's trade names
and trademarks, (ii) increasing sales through the introduction and development
of new products and product lines, (iii) success of marketing initiatives to be
undertaken by the Company, (iv) increasing international sales through
distribution arrangements in Japan and through the pursuit of additional
distribution arrangements in other countries, (v) increasing distribution
through expansion of the Company's network of distributors and its customer
base, (vi) success of the Company in forecasting demand for particular designs
and product styles and its success in establishing production and delivery
schedules and forecasts which accurately anticipate and respond to market
demand, (vii) success in expanding the Company's market through increasing
sales to large regional and national distributor accounts, (viii) success of
the Company in achieving increases in net sales such that cost of goods sold
and selling, general and administrative expenses may decrease as a percentage
of net sales and (ix) the size and growth rate of the custom wheel market.
The forward-looking statements included herein are based upon current
expectations that involve a number of risks and uncertainties. These
forward-looking statements are based upon assumptions that the Company will
continue to design, manufacture, market and ship new products on a timely
basis, that competitive conditions within the automotive aftermarket industry
will not change materially or adversely, that the custom wheel market will
continue to experience steady growth, that demand for the Company's products
will remain strong, that the Company will retain existing distributors and key
management personnel, that inventory risks due to shifts in market demand will
be minimized, that the Company's forecast will accurately anticipate market
demand and that there will be no material adverse change in the Company's
operations or business. Assumptions relating to the foregoing involve
judgments with respect, among other things, to future economic, competitive and
market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of
the Company. Although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the results
contemplated in forward-looking information will be realized. In addition, as
disclosed above, the business and operations of the Company are subject to
substantial risks which increase the uncertainty inherent in such
forward-looking statements. Any of the other factors disclosed above could
cause the Company's net sales or net income, or growth in net sales or net
income, to differ materially from prior results.
9
<PAGE> 12
Growth in absolute amounts of costs of goods sold and selling, general and
administrative expenses or the occurrence of extraordinary events could cause
actual results to vary materially from the results contemplated in the
forward-looking statements. Budgeting and other management decisions are
subjective in many respects and thus susceptible to interpretations and
periodic revisions based on actual experience in business developments, the
impact of which may cause the Company to alter its marketing, capital
expenditure or other budgets, which may in turn affect the Company's results of
operations. In light of the significant uncertainties inherent in the
forward-looking information included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved.
PLAN OF DISTRIBUTION
Each Selling Shareholder is free to offer and sell his or her shares of
Common Stock at such times, in such manner and at such prices as he or she
shall determine. The Selling Shareholders have advised the Company that sales
of shares of Common Stock may be effected from time to time in one or more
types of transactions (which may include block transactions) in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Common Stock or a combination of such methods of sale, at market
prices prevailing at the time of sale, or at negotiated prices. Such
transactions may or may not involve brokers, dealers or cash transactions. The
Selling Shareholders have advised the Company that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the Selling Shareholders. The Selling Shareholders may effect
such transactions by selling Common Stock directly to purchasers or to or
through broker-dealers which may act as agents or principals. Such
broker-dealers may receive compensation in the form of discounts, concessions,
or commissions from the Selling Shareholders and/or the purchasers of Common
Stock for whom such broker-dealers may act as agents or to whom they sell as
principal, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). The Selling Shareholders and any
broker-dealers that act in connection with the sale of the Common Stock might
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the shares of Common Stock as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Shareholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares of Common Stock
against certain liabilities including liabilities arising under the Securities
Act.
Because Selling Shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Shareholders
will be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of his or her shares, any Selling
Shareholder, any selling broker or dealer and any "affiliated purchasers" may
be subject to Rule 10b-7 under the Exchange Act which prohibits any
"stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing
or stabilizing the price of Common Stock in connection with the Selling
Shareholder offering.
The Company has informed the Selling Shareholders that the
anti-manipulative Rules 10b-6 and 10b-7 promulgated under the 1934 Act may
apply to their sales in the market and has furnished each Selling Shareholder
with a copy of such rules and has informed them of the possible need for
delivery of copies of this Prospectus.
Selling Shareholders also may use Rule 144 under the Securities Act to
sell such securities, if they meet the criteria and conform to the requirements
of such Rule.
10
<PAGE> 13
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
Selling Shareholders. Except as set forth below, none of the Selling
Shareholders is currently an affiliate of the Company, and none of them has had
a material relationship with the Company during the past three years.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Beneficial
Beneficial Ownership and
Ownership Percentage of
of Common Stock Maximum Number Common Stock
at of Shares of After Giving
January 21, Common Stock Effect to
Name 1997(1)(2) Offered for Sale(2) Proposed Sale(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boyd Coddington 531,232 321,232 210,000
- --------------------------------------------------------------------------------------------------------------
Diane Coddington 356,013 356,013 0
- --------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & 2,708 2,708 0
Jenrette Securities Corp.
Custodian fbo Brent George
- --------------------------------------------------------------------------------------------------------------
William R. Gills and 13,277 13,277 0
Consuelo L. Gills UTD
3/29/68
- --------------------------------------------------------------------------------------------------------------
Miller Living Trust 7,133 7,133 0
- --------------------------------------------------------------------------------------------------------------
James G. Pao 5,434 5,434 0
- --------------------------------------------------------------------------------------------------------------
Anthony J. Semon 2,418 2,418 0
- --------------------------------------------------------------------------------------------------------------
Specialty Blanks, Inc. 3,386 3,386 0
- --------------------------------------------------------------------------------------------------------------
Anthony R. Stone 2,602 2,602 0
- --------------------------------------------------------------------------------------------------------------
Leroy C. Sutherland 2,976 2,976 0
- --------------------------------------------------------------------------------------------------------------
Gary G. Gripp 10,119 10,119 0
- --------------------------------------------------------------------------------------------------------------
Russell Bell 3,929 3,929 0
- --------------------------------------------------------------------------------------------------------------
Walter Cruttenden III 2,754 2,754 0
- --------------------------------------------------------------------------------------------------------------
Byron Roth 2,754 2,754 0
- --------------------------------------------------------------------------------------------------------------
Mike Walthall 1,837 1,837 0
- --------------------------------------------------------------------------------------------------------------
Wayne Lourenco 238 238 0
- --------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Denise Peterson 83 83 0
- --------------------------------------------------------------------------------------------------------------
Frank W. Cutler 10,000 10,000 0
- --------------------------------------------------------------------------------------------------------------
The Richard F. Foster 6,000 6,000 0
Family Trust UAD 5/24/93
- --------------------------------------------------------------------------------------------------------------
The Silagy Living Trust 5,000 5,000 0
DTD 1/15/93
- --------------------------------------------------------------------------------------------------------------
CJ & WM Reed Trust DTD 1986 5,000 5,000 0
- --------------------------------------------------------------------------------------------------------------
Ajit Singh M.D. Profit 1,000 1,000 0
Sharing Plan and Trust
- --------------------------------------------------------------------------------------------------------------
Peter G. Jones 5,419 5,419 0
- --------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & 2,717 2,717 0
Jenrette Securities Corp.
Custodian fbo
Alberto Jorge Ho Chen
- --------------------------------------------------------------------------------------------------------------
Yie Fong Chiang and 1,670 1,670 0
Kuang Chi Chiang
- --------------------------------------------------------------------------------------------------------------
Gary Rorden and 1,000 1,000 0
Sheryl S. Rorden
- --------------------------------------------------------------------------------------------------------------
Robert Fitzgerald 3,571 3,571 0
- --------------------------------------------------------------------------------------------------------------
Raymond P. Fulcher 10,000 10,000 0
- --------------------------------------------------------------------------------------------------------------
Brad Fanshaw 34,429 34,429 0
- --------------------------------------------------------------------------------------------------------------
Cruttenden Roth 81,250 81,250 0
Incorporated
- --------------------------------------------------------------------------------------------------------------
Black & Company 13,500 13,500 0
Incorporated
- --------------------------------------------------------------------------------------------------------------
Lawrence S. Black 19,688 19,688 0
- --------------------------------------------------------------------------------------------------------------
John F. Lillicrop 4,375 4,375 0
- --------------------------------------------------------------------------------------------------------------
Terry D. Schumacher 2,188 2,188 0
- --------------------------------------------------------------------------------------------------------------
Charles A. Sauer Trust 1,333 1,333 0
dtd 12/22/95
- --------------------------------------------------------------------------------------------------------------
Elizabeth L. Sauer Trust 1,333 1,333 0
dtd 12/22/95
- --------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Margaret E. Sauer Trust 1,333 1,333 0
dtd 12/22/95
- --------------------------------------------------------------------------------------------------------------
Cruttenden Roth 68,000 68,000 0
Incorporated
- --------------------------------------------------------------------------------------------------------------
Ty G. Rogers 1,866 1,866 0
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based solely upon the review of a shareholder transcript prepared by
the Transfer Agent for the Company as of such date.
(2) Includes an aggregate of 229,295 shares which may be acquired through
the exercise of warrants and options.
(3) Assumes the sale of all shares covered by this Prospectus. There can
be no assurance that any of the Selling Shareholders will sell any or
all of the shares of Common Stock offered by them hereunder.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and does not currently intend to do so. The Company intends to retain
any future earnings to support the development and growth of its business. Any
future determination to pay cash dividends will be at the discretion of the
Company's Board of Directors and will be dependent upon the Company's financial
condition, results of operations, cash requirements, plans for expansion,
contractual restrictions, if any, and other factors deemed relevant by the
Board of Directors.
DESCRIPTION OF SECURITIES
COMMON STOCK
The holders of outstanding shares of Common Stock are entitled to
receive dividends out of assets legally available therefor at such times and in
such amounts as the Board of Directors may, from time to time, determine,
subject to any preferences which may be granted to the holders of Preferred
Stock. Holders of Common Stock are entitled to one vote per share on all
matters on which the holders of Common Stock are entitled to vote and the
holders of Common Stock may cumulate their votes in the election of directors
upon giving notice as required by law. Cumulative voting means that in any
election of directors, each shareholder may give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of shares held by such shareholder, or such shareholder may distribute such
number of votes among as many candidates as the shareholder sees fit. The
Common Stock is not entitled to preemptive rights and is not subject to
redemption or conversion. Upon liquidation, dissolution or winding-up of the
Company, the assets (if any) legally available for distribution to shareholders
are distributable ratably among the holders of the Common Stock after payment
of all debt and liabilities of the Company and the liquidation preference of
any outstanding class or series of Preferred Stock. All outstanding shares of
Common Stock are, and the shares of Common Stock to be issued pursuant to this
offering will be, when issued and delivered, validly issued, fully paid and
nonassessable. The rights, preferences and privileges of holders of Common
Stock are subject to any series of Preferred Stock that the Company may issue
in the future.
PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series,
and the Board of Directors, without action by the holders of the Common Stock,
may fix or alter the voting rights, redemption provisions (including sinking
fund provisions), dividend rights, dividend rates, liquidation preferences,
conversion rights and any other rights, preferences, privileges and
restrictions of any wholly unissued series of Preferred Stock. The Board of
Directors, without shareholder
13
<PAGE> 16
approval, can issue shares of Preferred Stock with rights that could adversely
affect the rights of the holders of Common Stock. No shares of Preferred Stock
presently are outstanding, and the Company has no present plans to issue any
such shares. The issuance of shares of Preferred Stock could adversely affect
the voting power of holders of Common Stock and could have the effect of
delaying, deferring or preventing a change in control of the Company or other
corporate action.
OPTIONS
In May 1993, the Company granted to Brad Fanshaw, its former president,
options to purchase 71,429 shares of Common Stock at an exercise price of $1.00
per share (the "Fanshaw Options"). Mr. Fanshaw exercised 2,000 of the Fanshaw
Options in September 1995 and 35,000 in May 1996. The Company has agreed to
use its best efforts to register the shares of Common Stock issuable to Mr.
Fanshaw upon exercise of the Fanshaw Options and has included such shares in
this offering.
OTHER WARRANTS
In connection with a private placement of Notes in September 1993, the
Company issued to officers of the placement agent warrants to purchase (the
"Note Placement Agent Warrants") an aggregate of 9,328 shares of Common Stock
at a price of $4.25 per share. The Note Placement Agent Warrants are currently
exercisable and expire in September 1999. The holders of the Note Placement
Agent Warrants may elect to exercise the Note Placement Agent Warrants by
having withheld from the number of shares issuable upon exercise of the Note
Placement Agent Warrants that number of shares of Common Stock with an
aggregate fair market value at the time of exercise equal to the aggregate
exercise price. The exercise price and the number of shares of Common Stock
issuable upon the exercise of the Note Placement Agent Warrants is subject to
adjustment in the event of any stock dividend, stock split, recapitalization or
similar transaction and upon the issuance of shares of Common Stock, or rights
to acquire shares of Common Stock, at a price which is less than the exercise
price then in effect, with certain exceptions. Holders of the Note Placement
Agent Warrants also have been granted certain registration rights with respect
to the shares of Common Stock issuable upon exercise. See "Description of
Securities--Registration Rights."
In connection with an offering of securities in a private placement in
November 1994 (the "Private Placement"), the Company issued to officers of the
placement agent warrants to purchase (the "Unit Placement Agent Warrants") an
aggregate of 85,714 shares of Common Stock, which effective as of the closing
of the initial public offering were converted into 35,714 shares of Common
Stock as a result of having withheld from the number of shares issuable upon
exercise of the Unit Placement Agent Warrants that number of shares of Common
Stock (at an agreed price of $6.00 per share) equal to the aggregate exercise
price of $3.50 per share. Holders of the Unit Placement Agent Warrants have
been granted certain registration rights with respect to the shares of Common
Stock which were issued upon exercise. See "Description of Securities--
Registration Rights."
In connection with a public offering of securities in June 1996, the
Company issued to Cruttenden Roth Incorporated warrants to purchase up to 68,000
shares of Common Stock at an exercise price of $13.50 per share (the
"Representative's Warrants") and has included such shares in this offering.
The Representative's Warrants which are not transferable (other than to
officers or partners of the Representative), are exercisable for a period of
four years beginning June 11, 1997.
IPO WARRANTS
In connection with the Company's initial public offering, the Company
agreed to sell to the Representative and its co-manager warrants to purchase up
to 125,000 shares of Common Stock at an exercise price per share equal to $7.50
(the "IPO Warrants") and has included such shares in this offering. The IPO
Warrants, which are not transferable (other than to officers or partners of the
Representative or its co-manager), are exercisable beginning September 20, 1996
until September 20, 2000.
14
<PAGE> 17
REGISTRATION RIGHTS
The Company has granted to the holder of the Notes, subject to certain
limitations, the right to require the Company to file one registration
statement covering the Common Stock issuable upon conversion of the Notes at
any time commencing December 15, 1995.
The Company has granted to the holders of the Common Stock underlying
warrants issued in connection with the Private Placement (the "Warrants"),
subject to certain limitations, the right to require the Company to file a
registration statement covering such Common Stock, commencing March 15, 1996.
In addition, the Company has agreed to use its best efforts to register such
shares of Common Stock on Form S-3 under the Securities Act, and in addition to
register the shares if the Company proposes to register stock or securities in
connection with certain underwritten public offerings of its securities,
subject to certain limitations.
In connection with the Private Placement, the Company granted to the
holders of Common Stock certain rights to register the shares if the Company
proposes to register stock or securities in connection with certain
underwritten public offerings of its securities, subject to certain
limitations. Any such shares of Common Stock not sold in this offering will
continue to have registration rights, subject to certain limitations.
The Company has granted to the holders of the Note Placement Agent
Warrants certain rights with respect to the registration under the Securities
Act of the 9,328 shares of Common Stock issuable upon exercise of the Note
Placement Agent Warrants (the "Note Placement Agent Shares"). The holders of
the Note Placement Agent Warrants can require the Company, subject to certain
limitations, to file a registration statement covering the Note Placement Agent
Shares at any time commencing March 15, 1996 and can request, on up to three
occasions, that the Note Placement Agent Shares be sold by means of an
underwritten public offering. In addition, the Company has agreed to use its
best efforts to register such shares on Form S-3 under the Securities Act and
the holders of the Note Placement Agent Warrants can require the Company,
subject to certain limitations, to include all or any portion of the 9,328 Note
Placement Agent Shares in any registration statement.
The Unit Placement Agent Warrants provide certain rights with respect
to the registration under the Securities Act of the shares of Common Stock
issuable upon exercise thereof. If the Company registers any of its Common
Stock either for its own account or for the account of other security holders,
the holders of such shares are entitled to include their shares of Common Stock
in the registration. Effective as of the closing of the Company's initial
public offering, the Unit Placement Agent Warrants were converted into 35,714
shares of Common Stock.
The Company has agreed to register the shares of Common Stock issued to
Mr. Fanshaw in February 1996 in the event that the Company undertakes a public
offering of its Common Stock and has included such shares in this offering.
The IPO Warrants provide certain rights with respect to the
registration under the Securities Act of up to 125,000 shares of Common Stock
issuable upon exercise thereof. The holders of the shares issuable upon
exercise of the IPO Warrants may require the Company to file a registration
statement under the Securities Act with respect to such shares. In addition,
if the Company registers any of its Common Stock either for its own account or
for the account of other security holders, the holders of the shares issuable
upon exercise of the IPO Warrants are entitled to include their shares of
Common Stock in the registration.
The Representative's Warrants provide certain rights with respect to
the registration under the Securities Act of up to 68,000 shares of Common
Stock issuable upon exercise thereof at a price of $13.50 per share. The
holders of the shares issuable upon exercise of the Representative's Warrants
may require the Company to file a registration statement under the Securities
Act with respect to such shares. In addition, if the Company registers any of
its Common Stock either for its own account or for the account of other
security holders, the holders of the shares issuable upon exercise of the
Representative's Warrants are entitled to include their shares of stock in the
registration.
15
<PAGE> 18
The Company generally is required to bear all costs incurred in
connection with any such registrations, other then underwriting discounts and
commissions. The foregoing registration rights could result in substantial
future expense to the Company and could adversely affect any future equity or
debt offerings of the Company.
CERTAIN CHARTER PROVISIONS
The Company's Articles of Incorporation provide that, to the fullest
extent permitted by California law, the Company's directors will not be liable
for monetary damages for breach of the directors' fiduciary duty of care to the
Company or its shareholders. Pursuant to this provision, the Company has
entered into indemnity agreements with each of its directors and executive
officers. This provision in the Articles of Incorporation does not eliminate
the duty of care, and in appropriate circumstances equitable remedies such as
an injunction or other forms of nonmonetary relief would remain available under
California law. Each director will continue to be subject to liability for
breach of the director's duty of loyalty to the Company, for acts or omissions
involving intentional misconduct or knowing and culpable violations of law, for
acts or omissions that a director believes to be contrary to the best interests
of the Company or its shareholders or that involve the absence of good faith on
the part of the director, for any transaction from which the director derived
an improper personal benefit, for acts or omissions involving a reckless
disregard for the director's duty to the Company or its shareholders when the
director was aware or should have been aware of a risk of serious injury to the
Company or its shareholders, for acts or omissions that constitute an unexcused
pattern of inattention that amounts to an abdication of the director's duty to
the Company or its shareholders, for improper transactions between the director
and the Company, for improper distributions to shareholders and loans to
directors and officers or for acts or omissions by the director acting in his
or her capacity as an officer of the Company. This provision also does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
TRANSFER AGENT, REGISTRAR AND WARRANT AGENT
The stock transfer agent, registrar and warrant agent for the Common
Stock and Warrants is U.S. Stock Transfer Corporation, Glendale, California.
LEGAL MATTERS
The validity of the securities offered will be passed on for the
Company by Higham, McConnell & Dunning, Laguna Niguel, California. Curt C.
Barwick, a partner of the firm and a member of the Board of Directors of the
Company, holds as of the date hereof, warrants to purchase 3,000 shares of
Common Stock.
EXPERTS
The balance sheet as of December 31, 1995 and the statements of income,
shareholders' equity and cash flows for the years ended December 31, 1994 and
1995 incorporated by reference in this Prospectus have been so incorporated in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
16
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses payable in connection with the distribution of the securities
being registered (estimated except for the registration fee), all of which will
be borne by the Registrant, are as follows:
<TABLE>
<S> <C>
Registration Fee $ 4,112
NASDAQ Filing Fee $17,500
Blue Sky Fees and Expenses $ 2,500
Legal Fees and Expenses $15,000
Accounting Fees and Expenses $ 5,000
Miscellaneous Expenses $ 5,000
-------
Total $49,112
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
The Registrant's Amended and Restated Articles of Incorporation
("Articles of Incorporation") provide that, to the fullest extent permitted by
California law, the Registrant's directors will not be liable for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
or its shareholders. This provision in the Articles of Incorporation does not
eliminate the duty of care and in appropriate circumstances equitable remedies
such as an injunction or other forms of nonmonetary relief would remain
available under California law. Each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Registrant, for
acts or omissions involving intentional misconduct or knowing and culpable
violations of law, for acts or omissions that a director believes to be
contrary to the best interests of the Registrant or its shareholders or that
involve the absence of good faith on the part of the director, for any
transaction from which the director derived an improper personal benefit, for
acts or omissions involving a reckless disregard for the director's duty to the
Registrant or its shareholders when the director was aware or should have been
aware of a risk of serious injury to the Registrant or its shareholders, for
acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the Registrant or its
shareholders, for improper transactions between the director and the
Registrant, for improper distributions to shareholders and loans to directors
and officers or for acts or omissions by the director in his or her capacity as
an officer of the Registrant.
The inclusion of the above provision in the Articles of Incorporation
may have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter shareholders or management from bringing
a lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefitted the Registrant and
its shareholders. At present, there is no litigation or proceeding pending
involving a director of the Registrant as to which indemnification is being
sought, nor is the Registrant aware of any threatened litigation that may
result in claims for indemnification by any director.
The Registrant's Articles of Incorporation authorizes the Registrant to
indemnify its directors and officers to the fullest extent permitted by
California law, including circumstances in which indemnification is otherwise
discretionary under California law. The Registrant entered into
indemnification agreements with certain of its directors and officers that
require the Registrant to indemnify such directors and officers to the fullest
extent permitted by law. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable.
17
<PAGE> 20
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 Stanton, State of California on January 21,
1997.
BOYDS WHEELS, INC.
By: /s/ Boyd Coddington
------------------------------------
Boyd Coddington,
Chairman of the Board 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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Boyd Coddington Chairman of the Board and January 21, 1997
- ----------------------------------------- Chief Executive Officer
Boyd Coddington
/s/ Rex A. Ours Secretary, Chief Financial Officer, January 21, 1997
- ----------------------------------------- Principal Financial and
Rex Ours Accounting Officer
/s/ Stanley Clark Chief Operating Officer January 21, 1997
- ----------------------------------------- and Director
Stanley Clark
/s/ Curt C. Barwick Director January 21, 1997
- -----------------------------------------
Curt C. Barwick
/s/ Marcus Sorenson Director January 21, 1997
- -----------------------------------------
Marcus Sorenson
/s/ Melanie McCaffery Director January 21, 1997
- -----------------------------------------
Melanie McCaffery
</TABLE>
18
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
- ------ ----------- -----------
<S> <C>
3.1* Articles of Incorporation as filed with the California Secretary
of State on April 27, 1988
3.2* Amended and Restated Articles of Incorporation filed with the
California Secretary of State on December 12, 1991
3.3* Amended and Restated Articles of Incorporation filed with the
California Secretary of State on October 13, 1994
3.4* Certificate of Determination of Preferences of Series A
Redeemable Preferred Stock of Registrant filed with the
California Secretary of State on November 2, 1994
3.5* Agreement of Merger by and between Registrant and Boyds
Ultra Violet, Inc. filed with the California Secretary
of State on November 2, 1994
3.6* Bylaws of the Registrant, as amended and restated
5.1 Opinion of Higham, McConnell & Dunning
23.1 Consent of Higham, McConnell & Dunning (included in Exhibit 5.1)
23.2 Consent of Coopers & Lybrand L.L.P.
</TABLE>
- ------------------
* Filed previously as an exhibit to Registration Statement
No. 33-94064LA, by this reference incorporated herein.
19
<PAGE> 1
EXHIBIT 5.1
(714) 365-5516
January 21, 1997
Boyds Wheels, Inc.
8380 Cerritos Avenue
Stanton, California 90680
Re: Registration on Form S-3 of
1,019,565 Shares of Common Stock
of Boyds Wheels, Inc.
--------------------------------
Gentlemen:
We have acted as counsel to Boyds Wheels, Inc., a California
corporation (the "Company"), in connection with the Company's filing with the
Securities and Exchange Commission (the "Commission") of a registration
statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "1933 Act"), with respect to 1,019,565 shares ("Shares")
of its Common Stock, no par value, including 229,295 Shares (the "Option
Shares") issuable upon exercise of outstanding options and warrants (the
"Options"), which may be sold from time to time by certain shareholders of the
Company described in the Registration Statement.
In connection with the opinion expressed below, we have examined and
relied upon, as to factual matters, originals or photostatic or certified copies
of such corporate records, including, without limitation, minutes of the
meetings of the Board of Directors of the Company and other instruments,
certificates of corporate officers, and such other documents as we have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed. In
making such examinations, we have assumed the genuineness of all signatures and
the authenticity of all documents submitted to us as originals, and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies.
We have examined and relied upon, as to matters of law, such
considerations of law as we, in our judgment, have deemed necessary or
appropriate to render the opinion expressed below. This opinion is limited to
federal law and the corporate law of the State of California, and we can assume
no responsibility for the law of any other jurisdiction.
<PAGE> 2
Boyds Wheels, Inc.
January 21, 1997
Page 2
Based upon the foregoing, we are of the opinion that the Shares of
the Company's Common Stock being registered under the 1933 Act pursuant to the
Registration Statement are, or in the case of the Option Shares upon exercise of
the respective options and warrants and payment therefore will be, legally
issued, fully paid and nonassessable shares of Common Stock of the Company.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to all references to our firm in the Registration
Statement. In giving this opinion, we do not hereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
1933 Act or the rules and regulations of the Commission promulgated thereunder.
This opinion is being delivered solely in regard to the transactions
contemplated by the Registration Statement and is intended for use solely in
connection with the consummation of such transactions. This opinion should not
be relied upon for any other purpose without our prior written consent; this
opinion should not be quoted in whole or in par or distributed in any way.
Very truly yours,
/s/ Higham, McConnell & Dunning
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HIGHAM, McCONNELL & DUNNING
CCB:jcb
<PAGE> 1
EXHIBIT 23.2
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Boyds Wheels, Inc. on Form S-3 of our report dated March 14, 1996, on our
audits of the financial statements of Boyds Wheels, Inc. as of December 31,
1995 and for the years ended December 31, 1995 and 1994, which report is
included in the 1995 Annual Report on Form 10-KSB. We also consent to the
reference to our firm under the caption "Experts".
/s/ COOPERS & LYBRAND L.L.P.
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COOPERS & LYBRAND L.L.P.
Newport Beach, California
January 17, 1997
