UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Registration No.__________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Ionic Fuel Technology, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
061-333140
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(I.R.S. Employer Identification Number)
300 Delaware Ave., Suite 1704, Wilmington DE 19801 (302) 427-5957
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Mr. Douglas F. Johnston, c/o Ionic Fuel Technology, Inc.
300 Delaware Ave., Suite 1704, Wilmington DE 19801 (302) 427-5957
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement is declared effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: o
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: x
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. o
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following
box. o
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CALCULATION OF REGISTRATION FEE
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Title of each class of securities to be Amount to be Proposed Proposed maximum Amount of
registered registered maximum aggregate offering registration
offering price fee
price per
share (1)
Shares of Common Stock 1,488,000 $3.22 $4,791,360 $1,413.45
$0.01 par value (2) Shares
Series A Warrants (3) 63,000 $0.33 $ 20,790 $ 6.13
Series B Warrants (3) 63,000 $0.33 $ 20,790 $ 6.13
TOTAL $1,425.71
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(1) Calculated, pursuant to Rule 457(c), as the average of the bid and asked
prices as of the close of trading on February 5, 1998.
(2) Includes 600,000 shares of Common Stock underlying 1,200,000 outstanding
Series A Warrants , 600,000 shares of Common Stock underlying 1,200,000
outstanding Series B Warrants, an aggregate of 150,000 shares of Common Stock
underlying outstanding warrants issued in consideration for investment banking
services; an aggregate of 126,000 shares of Common Stock underlying
Underwriter's Warrants (and the Series A and Series B Warrants issuable upon the
exercise thereof) issued in connection with the Company's initial public
offering in July 1994 and 12,000 shares of Common Stock.
(3) Includes Warrants underlying the Underwriter's Warrants.
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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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IONIC FUEL TECHNOLOGY, INC.
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Form S-3 Cross Reference Sheet
Item Caption Location
1. Forepart of Registration Statement Inside Front and Outside Back
Cover Pages
2. Inside Front and Outside Back Cover Pages Inside Front and Outside Back
Cover Pages
3. Summary Information and Risk Factors Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities Description of Securities
10. Interest of Named Experts and Counsel Legal Matters; Experts
11. Material Changes Not Applicable
12. Incorporation of Certain Information by Reference Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position on Risk Factors
Indemnification for Securities Act Liabilities
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Subject to completion dated February 5, 1998
PROSPECTUS
1,488,000 Shares of Common Stock
63,000 Series A Warrants / 63,000 Series B Warrants
IONIC FUEL TECHNOLOGY, INC.
This Prospectus relates to the offering of 1,488,000 shares of common
stock ("Common Stock"), par value $0.01 per share, of Ionic Fuel Technology,
Inc. a Delaware corporation ("Company"). 12,000 of such shares of Common Stock
are being offered by certain of the Selling Stockholders; 600,000 of such shares
underlie 1,200,000 outstanding Series A Warrants ("Series A Warrants"); 600,000
of such shares underlie 1,200,000 outstanding Series B Warrants ("Series B
Warrants"); 150,000 of such shares underlie outstanding warrants issued in
consideration of investment banking services; 63,000 of such shares underlie
Underwriter's Warrants issued in connection with the Company's July 1994 initial
public offering ("Underwriter's Warrants"); 31,500 of such shares underlie the
63,000 Series A Warrants offered hereby and 31,500 of such shares underlie the
63,000 Series B Warrants offered hereby. Such Series A Warrants and Series B
Warrants also underlie the Underwriter's Warrants, which entitle the holder to
purchase one (1) unit consisting of one (1) share of Common Stock, one (1)
Series A Warrant and one (1) Series B Warrant at an exercise price of $8.25 per
unit until July 28, 1999. (The Common Stock, Series A Warrants and Series B
Warrants are hereinafter referred to collectively as the "Securities.")
The Securities offered by this Prospectus may be sold from time to time
by the holders who have exercised their Series A or Series B Warrants ("Warrant
Holders") or by the Selling Stockholders. No underwriting arrangements have been
entered into by the Warrant Holders or the Selling Stockholders. The
distribution of the Securities by the Warrant Holders or the Selling
Stockholders may be effected in one or more transactions that may take place on
the over-the-counter market including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more dealers for
resale of such shares as principals at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Warrant Holders in connection with sales of the
Common Stock. Transfers of the Securities may also be made pursuant to
applicable exemptions under the Securities Act of 1933, as amended ("Securities
Act") including, but not limited to, sales under Rule 144 under the Securities
Act.
The Warrant Holders, Selling Stockholders and intermediaries through
whom the Securities may be sold may be deemed "underwriters" within the meaning
of the Securities Act with respect to the Securities offered, and any profits
realized or commissions received may be deemed underwriting compensation.
The Company will not receive any of the proceeds from the sale of the
securities by the Warrant Holders or the Selling Stockholders, but may receive
proceeds of up to $9,792,000 upon the exercise in full of the Series A Warrants,
the Series B Warrants, the Underwriter's Warrants and other outstanding warrants
held by certain of the Selling Stockholders. All costs in incurred in the
registration of the Securities are being borne by the Company. See "Selling
Stockholders."
The Company is required to furnish its security holders with annual
reports containing audited financial statements and the audit report of the
independent certified public accountants and such interim reports as it deems
appropriate or as may be required by law. The Company's fiscal year ends June
30.
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS", WHICH BEGINS ON PAGE 4.
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 __________________ , 1998
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Since the Company's July 1994 public offering, there has been a public
market for the Common Stock, the Series A Warrants and the Series B Warrants. No
assurance may be given, however, that such market will be sustained. The Common
Stock, Series A Warrants and Series B Warrants are quoted on The Nasdaq SmallCap
Market(sm) ("Nasdaq") under the symbols "IFTI," "IFTW" and "IFTZ," respectively.
There can be no assurance given that the Company will be able to satisfy on a
continuing basis the requirements for quotation of such securities on Nasdaq.
See Risk Factors "Potential Absence of Public Market for Common Stock," and
"Risk of Penny Stock Regulations."
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act") and in accordance
therewith files reports, proxy or information statements and other information
with the Securities and Exchange Commission ("Commission"). Such reports, proxy
statements and other information can be inspected and copies made at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional office
located at Seven World Trade Center, Suite 1300, New York, NY 10048. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission in Room 1024 at 450 Fifth Street, N.W., Washington,
D.C. 20549. Such reports may also be obtained by visiting the Commission's
Internet home page at www.sec.gov.
Additional information regarding the Company and the Common Stock
offered hereby is contained in the Registration Statement on Form S-3 and the
exhibits thereto filed with the Commission under the Securities Act of 1933, as
amended. For further information pertaining to the Company and the Common Stock,
copies may be inspected without charge at, and copies thereof may be obtained at
prescribed rates from, the office of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission under
the Exchange Act, are incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the year ended June 30, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1997;
(c) The Company's Current Report on Form 8-K dated July 10, 1997;
(d) The Company's Current Report on Form 8-K dated July 24, 1997; and
(e) The description of the Company's securities contained in the Company's
Registration Statement under Section 12 of the Exchange Act, and any and all
amendments and 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 subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock offered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part of this Prospectus from the date of filing of such documents. Any statement
contained in a document 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 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.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written request of such person, a copy of any or
all of the documents incorporated by reference (other than exhibits to such
documents). Requests for such copies should be directed to the principal offices
of the Company at Ionic Fuel Technology, Inc., 300 Delaware Ave. Suite 1704,
Wilmington DE 19801, telephone number (302) 427-5957.
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RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
HIGH DEGREE OF RISK. SUCH SECURITIES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR
SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS,
AS WELL AS ALL OF THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS
AND THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS, THE NOTES THERETO AND
THE DOCUMENTS REFERENCED HEREIN.
When used in this Prospectus, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended regarding events, conditions
and financial trends that may affect the Company's future plans of operations,
business strategy, operating results and financial position. Prospective
investors are cautioned that any forward-looking statements are not guarantees
of future performance and are subject to risks and uncertainties and that actual
results may differ materially from those included within the forward-looking
statements as a result of various factors. Such factors are described in the
Risk Factors set forth below. All references are to the Annual Report on Form
10-K for the fiscal year ended June 30, 1997.
UNCERTAINTY OF FUTURE PROFITABILITY IN LIGHT OF RECURRING
LOSSES. The Company has an accumulated deficit at September 30, 1997 of
($10,183,130). For the three months ended September 30, 1997 and the year ended
June 30, 1997, the Company had net losses of ($279,463) and ($1,004,425),
respectively. The Company does not expect to be profitable unless and until such
time as the IFT System generates sufficient revenue to fund the Company's
continuing operations. No assurance can be given that the Company will become
profitable. See "Selected Consolidated Financial Data," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
"Consolidated Financial Statements".
UNCERTAINTY OF MARKET ACCEPTANCE. The Company was formed in December
1991 and is therefore subject to all of the risks inherent in operating a new
business. Sales and leasing of the IFT System did not commence on a commercial
basis until the beginning of 1993. The IFT System has been sold only on a
limited basis in the U.K. and Europe and tested on only a limited basis and sold
only once in the United States. No assurance can be given that the IFT System
will be accepted in the marketplace in the quantity necessary for the Company to
operate profitably, or at all. See "Business--Marketing and Sales"
DEPENDENCE ON CONTINUED ENFORCEMENT OF ENVIRONMENTAL
REGULATIONS. Domestic and international environmental laws and regulations are,
and will continue to be, a principal factor affecting demand for the IFT System.
A decline in enforcement and related expenditures by businesses subject to such
laws and regulations could have a significant adverse effect on the demand for
the IFT System. Furthermore, there can be no assurance that
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increased governmental regulation of the environment will result in increased
revenue to the Company. In addition, there can be no assurance that the IFT
System currently, or as adjusted or enhanced, will enable others to comply with
yet unspecified emissions standards implemented by any amendments to present
laws and regulations or any future legislation or that the Company will be
successful in its marketing efforts in these regards. See
"Business--Regulations."
EXPOSURE TO PRODUCT LIABILITY CLAIMS. The Company may be subject to
product liability in connection with the use of its System. In the event the
insurer of the Company's wholly owned UK subsidiary IFT Ltd ("IFT Ltd.") decides
to no longer insure IFT Ltd. on terms and conditions acceptable to the Company,
or at all, the Company may experience difficulty in securing adequate coverage
in a timely fashion on attractive terms and conditions, if at all. An
underinsured or completely uninsured claim against the Company, if successful
and of sufficient magnitude, could have a material adverse effect on the
Company.
INTENSELY COMPETITIVE MARKET. Competition in the manufacture and sale
of equipment to reduce harmful emissions or improve fuel consumption is intense.
Other companies, many of whom have substantially greater financial resources
than the Company, also supply equipment which reduces harmful emissions or
improves fuel consumption. Current competitors or new market entrants could
introduce new or enhanced products with features, methods or processes that
render the IFT System obsolete or inferior.
ABILITY TO ADAPT TO TECHNOLOGICAL CHANGE. Future technological
developments and novel approaches in the flame combustion field as well as
enhancements of current technology will, in all likelihood, create new products
and services that directly compete with the IFT System. The Company's future
success will, to a certain extent, depend on its ability to develop and enhance
its product and to keep abreast of market needs and advancing technology. No
assurance can be given that the Company will be able to keep up with
technological change, the demands of the marketplace, or otherwise compete
successfully. See "Business--Marketing and Sales" and --"Competition."
DEPENDENCE UPON PATENTS AND PROPRIETARY RIGHTS. The technology
utilized in the IFT System is protected by patent rights sold and assigned to
the Company and patent applications pending on behalf of the Company. The
Company's success depends, in part, on its ability to protect these patents,
maintain trade secret protection and operate without infringing on the
proprietary rights of third parties. There can be no assurance that any of the
pending patent applications owned by the Company will be approved, that the
Company's patent rights will provide the Company with competitive advantages or
not be challenged by third parties and will adequately protect the IFT System,
its components and processes. Furthermore, there can be no assurance that others
will not independently develop similar or superior technologies, duplicate any
of the Company's processes or design around the Company's patented processes. In
addition, the Company could incur substantial costs in defending itself in
patent infringement suits brought against the Company or in bringing patent
infringement suits against third parties. Finally, no assurance can be given
that the Company's trade secrets and proprietary know-how will not otherwise
become known or be independently discovered by others. See "Business--Patents."
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LACK OF EMPLOYMENT AGREEMENTS WITH KEY MANAGEMENT. The
Company is highly dependent upon the efforts of Messrs. Douglas Johnston and
Anthony Garner, its Chairman and President, respectively. The Company does not
have employment agreements with any of these individuals. If the Company were to
lose the services of any of these officers before a qualified replacement could
be found, it may have a material adverse effect upon the Company. See
"Management."
NEED FOR ADDITIONAL FINANCING. The Company may be required to seek
additional financing in the near future. No assurance can be given that, if
needed, such financing will be available to the Company on commercially
acceptable terms, if at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
CONTROL BY EXISTING MANAGEMENT. As of the date hereof, the Company's
directors and executive officers beneficially own approximately 30.5% of the
outstanding shares of the Company's Common Stock. Accordingly, current
management will continue to have the ability to significantly influence the
election of all of the Company's directors and the direction of the Company's
affairs. See "Principal Stockholders."
POTENTIAL ADVERSE EFFECT OF CURRENCY FLUCTUATIONS. The Company's
manufacturing is conducted in the U.K. and sales activities have been focused
primarily in Europe. Foreign sales are subject to certain inherent risks,
including unexpected changes in regulatory and other legal requirements, tariffs
and other trade barriers, potentially adverse tax consequences and risks
associated with currency fluctuations. Currently, the Company does not enter
into any derivative contracts to hedge these risks.
LIMITED SALES FORCE. The Company currently has only a small sales and marketing
force and intends to apply a portion of the proceeds from this offering to
expand such force. There is no assurance that the Company will be able to
establish a successful marketing strategy or sales and marketing organization.
See "Business--Marketing and Sales."
BROAD DISCRETION IN APPLICATION OF PROCEEDS. All of the estimated
proceeds of up to $9,792,000 which the Company may receive upon the exercise in
full of the Series A Warrants, the Series B Warrants, the Underwriter's
Warrants, the Series A and Series B Warrants underlying the Underwriter's
Warrants and certain other outstanding warrants held by certain of the Selling
Stockholders have been allocated to working capital and general corporate
purposes. Therefore, the Company will have broad discretion as to the
application of such proceeds. Such working capital may be used to pay salaries
and fees to the Company's officers. See "Use of Proceeds."
POTENTIAL ABSENCE OF PUBLIC MARKET FOR COMMON STOCK. Although the
Common Stock is quoted on the Nasdaq SmallCap Market, there can be no assurance
that an active trading market for Common Stock will be sustained, or that the
Company will be able to meet Nasdaq's requirements for continued quotation. In
the absence of an active trading market on Nasdaq
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or, if the Common Stock cannot be traded on Nasdaq, the Common Stock could
instead be traded on the OTC Bulletin Board or in the "Pink Sheets." In such
event, the liquidity and stock price of the Company's securities in the
secondary market may be adversely affected. In addition, in the event the
securities are delisted, broker-dealers have certain regulatory burdens imposed
upon them which may discourage broker-dealers from effecting transactions in the
Company's securities, further limiting the liquidity of the Company's
securities.
POTENTIAL ADVERSE EFFECT OF SHARES SOLD PURSUANT TO RULE 144.
Sales of substantial amounts of Common Stock outstanding immediately prior to
this offering, under Rule 144, promulgated under the Securities Act of 1933, or
otherwise, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Company's Securities. See "Shares Available for
Future Sale."
NO DIVIDENDS. The Company has not paid any dividends on its Common
Stock to date and does not anticipate declaring or paying any dividends in the
foreseeable future. The Company anticipates that all of its earnings in the
foreseeable future will be retained to finance the growth of its business.
ANTI-TAKEOVER CONSIDERATIONS. The Company's Certificate of
Incorporation and the Delaware General Corporation Law contain certain
provisions that may have the effect of inhibiting a non-negotiated merger or
other business combination. These provisions, among others, may have the effect
of deterring hostile takeovers or delaying or preventing changes in control or
management of the Company, including transactions in which stockholders might
otherwise receive a premium for their shares over the then-current market price.
In addition, these provisions may limit the ability of stockholders to approve
transactions that they may deem to be in their best interest.
DIRECTORS' LIMITED LIABILITY AND BROAD INDEMNIFICATION BY THE
COMPANY. The Company's Certificate of Incorporation also contains provisions
which limit the personal liability of the Company's directors and permits the
Company to indemnify its directors, officers, employees and agents to the
fullest extent permissible under the Delaware General Corporation Law. See
"Description of Securities--Delaware Anti-Takeover Law."
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended ("Act") may be sought by directors, officers and
controlling persons of the Company pursuant to such indemnity (or otherwise),
the Company 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 Company of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any such action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the Common Stock
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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RISK OF "PENNY STOCK" REGULATIONS. The Commission has adopted regulations which
define a "penny stock" to be any equity security that has a market price (as
defined) of less than $5.00 per share, subject to certain exceptions. In the
future, it is possible that the Common Stock may be deemed to be a "penny stock"
as defined by the Exchange Act and the rules and regulations promulgated
thereunder. For any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prepared by the Commission relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities, information on
the limited market in penny stocks and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. In addition, the broker-dealer must obtain a
written acknowledgment from the customer that such disclosure information was
provided and must retain such acknowledgment from the customer for at least
three years.
Further, monthly statements must be sent to the customer disclosing
current price information for the penny stock held in the account. While many
Nasdaq-listed securities would otherwise be covered by the definition of penny
stock, transactions in a Nasdaq-listed security would be exempt from all but the
sole market-maker provision for: (i) issuers who have $2,000,000 in tangible
assets ($5,000,000 if the issuer has not been in continuous operation for three
years); (ii) transactions in which the customer is an institutional accredited
investor; and (iii) transactions that are not recommended by the broker-dealer.
In addition, transactions in a Nasdaq-listed security directly with a Nasdaq
market-maker for such securities would be subject only to the sole market-maker
disclosure, and the disclosure with respect to commissions to be paid to the
broker-dealer and the registered representative.
The above described rules may materially adversely affect the liquidity
for the market of the Company's securities. Such rules may also affect the
ability of broker-dealers to sell the Common Stock and may impede the ability of
holders (including, specifically, purchasers in this offering) of the Common
Stock to sell such securities in the secondary market.
USE OF PROCEEDS
The $9,792,000 in proceeds which may be received by the Company upon
the exercise in full of outstanding Series A Warrants and Series B Warrants, the
Underwriter's Warrants, the Series A Warrants and Series B Warrants underlying
the Underwriter's Warrants and certain other outstanding warrants held by the
Selling Stockholders will be added to the Company's general working capital. The
Company will not receive any proceeds from the sale of any securities by either
the Warrant Holders or the Selling Stockholders.
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SELLING STOCKHOLDERS
The Registration Statement of which this Prospectus forms a part covers
the registration of an aggregate of 288,000 shares of Common Stock, 63,000
Series A Warrants and 63,000 Series B Warrants. The costs of qualifying such
securities under federal and state securities laws, together with legal and
accounting fees, printing and other costs in connection with this offering, will
be paid by the Company.
The Company will not receive any proceeds from the sale of the
securities by the Selling Stockholders.
Set forth below is a list of the Selling Stockholders and the number of
shares of Common Stock which are being registered pursuant to the Registration
Statement, of which this Prospectus forms a part:
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No. of Shares No. of Shares
Owned Before No. of Shares Owned After
Name (1) Offering Being Offered Offering
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Daphne E. Boness 4,000 4,000 -0-
8,000 8,000 -0-
Roy M. Boness
Theodore J. Burns 36,000 36,000 (2) -0-
Donald M. Kleban 373,400 140,000 (3) 233,400
Perrin, Holden & Davenport
Capital Corp. 100,000 100,000 (4) -0-
</TABLE>
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(1) The persons named in the above table have sole voting and investment power
with respect to all of the Common Stock shown as beneficially owned by them,
except as otherwise indicated.
(2) Includes 18,000 shares of Common Stock underlying Mr. Burns' portion of the
Underwriter's Warrants; 9,000 shares of Common Stock underlying the Series A
Warrants underlying such portion and 9,000 shares of Common Stock underlying the
Series B Warrants underlying such portion.
(3) Includes 45,000 shares of Common Stock underlying Mr. Kleban's portion of
the Underwriter's Warrants; 22,500 shares of Common Stock underlying the Series
A Warrants underlying such portion, 22,500 shares of Common Stock underlying the
Series B Warrants underlying such portion, 25,000 shares of Common Stock
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underlying warrants which are immediately exercisable at $2.25 per share and
25,000 shares of Common Stock underlying warrants which are immediately
exercisable at $3.50 per share.
(4) Includes 50,000 shares of Common Stock underlying warrants which are
immediately exercisable at $2.25 per share and 50,000 shares of Common Stock
underlying warrants which are immediately exercisable at $3.50 per share.
Set forth below is a list of the Selling Stockholders and the number of
Series A Warrants which are being registered pursuant to the Registration
Statement, of which this Prospectus forms a part:
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<S> <C> <C> <C> <C> <C> <C>
No. of Warrants No. of Warrants
Owned Before No. of Warrants Owned After
Name (1) Offering Being Offered Offering
- -------- -------- ------------- --------
Theodore J. Burns 18,000 18,000 (1) -0-
Donald M. Kleban 53,000 45,000 (2) 8,000
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(1) Includes 18,000 Series A Warrants underlying Mr. Burns' portion of the
Underwriter's Warrants.
(2) Includes 45,000 Series A Warrants underlying Mr. Kleban's portion of the
Underwriter's Warrants.
Set forth below is a list of the Selling Stockholders and the number of
Series B Warrants which are being registered pursuant to the Registration
Statement, of which this Prospectus forms a part:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name (1) No. of Warrants No. of Warrants No. of
- --------
Owned Before Being Offered Warrants
-------------
Offering Owned After
Offering
Theodore J. Burns 18,000 18,000 (1) -0-
Donald M. Kleban 113,000 45,000 (2) 68,000
</TABLE>
- ---------------------
(1) Includes 18,000 Series B Warrants underlying Mr. Burns' portion of the
Underwriter's Warrants.
(2) Includes 45,000 Series B Warrants underlying Mr. Kleban's portion of the
Underwriter's Warrants.
10
<PAGE>
PLAN OF DISTRIBUTION
The Common Stock offered by the Warrant Holders and the Selling
Stockholders may be sold from time to time by the Warrant Holders, the Selling
Stockholders, or by their pledgees, donees, transferees or other successors in
interest, at their sole discretion. Such sales may be made on Nasdaq at prices
and on terms then prevailing or at prices related to the then current market
price, or in negotiated transactions. The Common Stock offered by the Warrant
Holders and Selling Stockholders is not being underwritten.
In general, the Common Stock may be sold by one or more of the
following means: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) an exchange distribution in accordance with the
rules of such exchange (if the securities are then listed on an exchange); (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; or (e) other securities transactions.
In effecting sales, brokers or dealers engaged by the Warrant Holders or
Selling Stockholders may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from the Warrant
Holders or Selling Stockholders in amounts to be negotiated immediately prior to
the sale. No commissions or other fees shall be payable by the Company to any
broker or dealer in connection with this offering. Such brokers or dealers and
any other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended, in connection with
such sales.
The Company has advised the Selling Stockholders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market, has furnished each Selling Stockholder
with a copy of Regulation M and has informed them of the need for delivery of
copies of this Prospectus.
DESCRIPTION OF SECURITIES
Series A and Series B Warrants
Two Series A Warrants entitle the holder to purchase one share of Common
Stock for $6.50 until July 28, 1998. Two Series B Warrants entitle the holder to
purchase one share of Common Stock for $7.50 until July 28, 1999. The Company
may redeem the Series And Series B Warrants at a price of $.01 for two
Redeemable Warrants upon not less than 30 days prior written notice if the last
sale price of the Common Stock has been at least $9.50 with respect to the
Series A Warrants and $10.50 with respect to the Series B Warrants for the 20
consecutive trading days ending on the third day prior to the notice of
redemption.
11
<PAGE>
The exercise price and number of shares of Common Stock issuable on
exercise of the Series A and Series B Warrants are subject to adjustment in
certain circumstances, including the event of a stock dividend on, or a
subdivision, combination or the recapitalization of the Common Stock; or upon
the sale of all of the assets of the Company or the merger or other
consolidation of the Company into another corporation where the Company is not
the surviving corporation. However, the Series A and Series B Warrants are not
subject to adjustment for issuances of Common Stock at a price below the
exercise price of the Series A and Series B Warrants.
No fractional shares will be issued upon exercise of the Series A and
Series B Warrants. However, if a Warrant Holder exercises all Series A and
Series B Warrants then owned of record by him, the Company will pay to such
Warrant Holder, in lieu of the issuance of any fractional share which is
otherwise issuable to such warrant holder, an amount in cash based on the market
value of the Common Stock on the last trading day prior to the date of exercise.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the securities
being offered by the Company will be passed upon for the Company by McLaughlin &
Stern, LLP, New York, NY. A member of the firm of McLaughlin & Stern, LLP is the
Secretary of the Company and owns 10,700 shares of Common Stock, 1,000 Series A
Warrants and 1,000 Series B Warrants.
EXPERTS
The Consolidated Financial Statements and the financial statement
schedule of the Company appearing in the Company's Annual Report on Form 10-K
for the year ended June 30, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such Consolidated Financial Statements and
schedule are incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
12
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations in connection with this Offering
other than those contained in this Prospectus and, if given or made, such
information or representations must not be relied on as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities offered
by this Prospectus, or an offer or solicitation of an offer to buy any
securities by any person in any jurisdiction in which such offer or solicitation
is not authorized or is unlawful. The delivery of this Prospectus shall not,
under any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date of this Prospectus.
-----------
TABLE OF CONTENTS
Page
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Incorporation of Certain Documents . . . . . . . . . . . . . . . . . . . .3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . .11
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
-----------
Until _______, 1998 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Securities offered hereby, whether or not
participating in the distribution, may be required to deliver a Prospectus. This
is in addition to the obligation of dealers to deliver a Prospectus when acting
as underwriters and with regard to their unsold allotments or subscriptions.
IONIC FUEL TECHNOLOGY, INC.
1,488,000 Shares Of Common Stock
63,000 Series A Warrants / 63,000 Series B Warrants
-----------------
PROSPECTUS
-----------------
_________________, 1998
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses of this offering which will be borne by the Company are
estimated to be as follows:
Securities and Exchange Commission registration fee
SEC Registration Fee $ 1,425.71
Legal Services $ 12,000.00
Accounting Services $ 5,000.00
Blue Sky fees and expenses $ 5,000.00
Printing $ 10,000.00
Miscellaneous $ 574.29
---------
Total $ 34,000.00
All of the above expenses except the registration fee are estimated.
Item 15. Indemnification of Directors and Officers
Paragraphs "NINTH" and "TENTH" of the Company's Certificate of Incorporation
contain the following provisions with respect to the indemnification of
Directors and Officers:
"NINTH: The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of
Section 102 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented."
"TENTH: The corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person."
14
<PAGE>
Item 16. Exhibits
5 Opinion and consent of McLaughlin & Stern, LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of McLaughlin & Stern, LLP filed as part of Exhibit 5
Item 17. Undertakings
Paragraph designations correspond to designations in Regulation S-B, Item
512.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(5) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided
however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registration pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) of section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement relating to the securities offered
15
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expense incurred or paid by a director, officer, or
controlling person of the registrant in the successful defense of any such
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.
16
<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 New York, State of New York, on February 9, 1998
IONIC FUEL TECHNOLOGY, INC.
By: Douglas F. Johnston, Chairman / CFO
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
Signature Title Date
/s/ Douglas F. Johnston Chairman / CFO February 9, 1998
Douglas F. Johnston
/s/ Anthony J. S. Garner Director / Pres. / CEO February 9, 1998
Anthony J. S. Garner
/s/ Paul C. O'Neill Director / Treas. February 9, 1998
Paul C. O'Neill
/s/ Frank J. Hollendoner Director February 9, 1998
Frank J. Hollendoner
/s/ Henry W. Sullivan Director February 9, 1998
Henry W. Sullivan
17
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Ionic Fuel
Technology, Inc. for the registration of 1,488,000 shares of its common stock,
63,000 Series A Warrants and 63,000 Series B Warrants and to the incorporation
by reference therein of our report dated September 5, 1997, with respect to the
consolidated financial statements and schedule of Ionic Fuel Technology, Inc.
included in its Annual Report (Form 10-K) for the year ended June 30, 1997,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Stamford, Connecticut
February 4, 1998
18
<PAGE>
McLaughlin & Stern, LLP
260 Madison Avenue, 18th Floor
New York, New York 10016
(212) 448-1100
February 6, 1998
Unites States Securities
and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Ionic Fuel Technology, Inc. ("Company")
Gentlemen:
Reference is made to the registration statement ("Registration Statement") on
Form S-3, filed the date hereof with the Securities and Exchange Commission by
the Company.
We hereby advise you that we have examined originals or copies certified to our
satisfaction of the Certificate of Incorporation and amendments thereto and the
By-Laws and amendments thereto of the Company, minutes of the meetings of the
Board of Directors and Shareholders and such other documents and instruments,
and we have made such examination of law as we have deemed appropriate as the
basis for the opinions hereinafter expressed.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware.
2. The 12,000 shares of the Company's Common Stock which are being offered for
sale by the Selling Stockholders have been duly and validly authorized and
issued and are fully paid and non-assessable.
3. The 600,000 shares of Common Stock issuable upon the exercise of 1,200,000
outstanding Series A Warrants; the 600,000 shares of Common Stock issuable upon
the exercise of 1,200,000 outstanding Series B Warrants; the 150,000 shares of
Common Stock issuable upon the exercise of certain other outstanding warrants
and the 63,000 shares of Common Stock issuable upon the exercise of the
Underwriter's Warrant have been duly and validly authorized and when paid for
will be fully paid and non-assessable.
4. The 63,000 Series A Warrants exercisable to purchase 31,500 shares of Common
Stock and the 63,000 Series B Warrants exercisable to purchase 31,500 shares of
Common Stock which are being offered for sale by the Selling Stockholders have
been duly and validly authorized and are exercisable in accordance with their
<PAGE>
terms. The aggregate of 63,000 shares of Common Stock issuable upon the exercise
of the Series A and Series B Warrants have been duly and validly authorized and
when paid for will be fully paid and non-assessable.ants have been duly and
validly authorized and when paid for will be fully paid and non-assessable.
We hereby consent to the reference to our firm under the caption "Legal Matters"
in the prospectus forming a part of such Registration Statement and to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
McLAUGHLIN & STERN, LLP
