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As filed with the Securities and Exchange Commission on May 8, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
__________________________
EXSORBET INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
IDAHO 82-0464589
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6007 S. 29TH STREET
FORT SMITH, ARKANSAS 72903
(501) 649-8401
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
__________________________
CHARLES CHUNN, JR.
EXSORBET INDUSTRIES, INC.
6007 S. 29TH STREET
FORT SMITH, ARKANSAS 72903
(501) 649-8401
(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: From time to
time after this Registration Statement becomes 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. / /
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. / /__________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /___________________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
AMOUNT PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER SHARE PRICE FEE
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Common Stock, $.001 par value 1,508,100 shares $4-1/16(1) $6,126,250(1) $2,112.50
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(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) on the basis of the
average of the high and low sales prices of the common stock on the
Nasdaq SmallCap Market on May 1, 1996.
__________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
[LOGO] 1,508,100 SHARES
EXSORBET INDUSTRIES, INC.
COMMON STOCK
($.001 PER SHARE)
This Prospectus relates to 1,508,100 shares (the "Offered Shares") of
common stock, par value $.001 per share ("EXSORBET Common Stock"), of
EXSORBET Industries, Inc., an Idaho corporation ("EXSORBET"), which Offered
Shares may be offered from time to time by and for the account of the Floyd
Leland Ogle Trust (the "Selling Shareholder"), First Commercial Trust Co., N.A.,
trustee (the "Trustee"). See "Selling Shareholder." EXSORBET will not receive
any of the proceeds from the sale of the Offered Shares. EXSORBET has agreed
to advance on behalf of the Selling Shareholder certain costs and expenses
incurred in connection with the registration under the Securities Act of 1933,
as amended (the "Securities Act"), of the offering described herein, not
including certain expenses such as commissions and discounts of underwriters,
dealers and agents, all of which costs and expenses Selling Shareholder has
agreed to reimburse EXSORBET. Selling Shareholder has agreed to bear all costs
and expenses relating to the registration of the Offered Shares under state and
federal securities laws (currently estimated to be $41,097), and of any offering
and sale by it hereunder including expenses such as brokerage fees, commissions
and discounts of underwriters, dealers or agents, if any. See "Selling
Shareholder," "Use of Proceeds" and "Plan of Distribution."
In February 1996, Floyd Leland Ogle, a former President of EXSORBET,
gifted 1,458,100 shares of EXSORBET Common Stock and an immediately
exercisable option for 50,000 shares of EXSORBET Common Stock to the Selling
Shareholder, whose sole beneficiary is Mr. Ogle's wife, Terie Elson Ogle, as
provided in that certain Inter Vivos Trust Declaration made by Mr. Ogle on
February 26, 1996 (the "Trust Instrument"). Mr. Ogle's shares placed in trust
comprise the Offered Shares being offered hereby and represent approximately
17.1% of the total outstanding shares of EXSORBET Common Stock. Following
Mr. Ogle's gift to the Selling Shareholder, EXSORBET granted the Selling
Shareholder certain registration rights in the shares of EXSORBET Common
Stock owned by it (the "Grant"). The shares offered hereby are being registered
pursuant to such Grant. Selling Shareholder's Trustee is required by the
Trust Instrument to liquidate the Selling Shareholder's holdings by March of
1998 or as soon as practicable as permitted by applicable law. The Trust
Instrument provides that the Trustee will attempt to sell approximately 3,000
shares of EXSORBET Common Stock each day until the shares held by the Selling
Shareholder are sold. See "Selling Shareholder" and "Plan of Distribution."
EXSORBET Common Stock is listed on the Nasdaq SmallCap Market ("Nasdaq
SmallCap") under the symbol "EXSO." On May 7, 1996, the closing sale price
of EXSORBET Common Stock was $4 per share.
The Offered Shares may be offered for sale from time to time by the
Selling Shareholder to or through brokers, dealers or underwriters acting as
principals or agents or directly to other purchasers or through agents in one
or more transactions on the Nasdaq SmallCap or any other stock exchange on
which the EXSORBET Common Stock is listed, in the over-the-counter market, in
one or more private transactions, or in a combination of such methods of sale,
at prices and on terms then prevailing, at prices related to such prices, or at
negotiated prices. The Selling Shareholder and any brokers and dealers through
whom sales of the Offered Shares are made may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and the commissions or discounts and other compensation paid to such
persons may be regarded as underwriters' compensation. See "Plan of
Distribution."
SEE "RISK FACTORS" ON PAGE 5 FOR INFORMATION THAT SHOULD BE CONSIDERED
REGARDING THE SECURITIES OFFERED HEREBY.
__________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE 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 MAY 8, 1996.
<PAGE>
AVAILABLE INFORMATION
EXSORBET is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements (if required) and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information filed by EXSORBET with the Commission may
be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and should be available at the Commission's Regional Offices at
7 World Trade Center, 13th Floor, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549.
EXSORBET has filed with the Commission a Registration Statement on Form S-3
(together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act, with respect to the Offered Shares. This
Prospectus does not contain all the information set forth in the Registration
Statement and the Appendices thereto, certain parts of which were omitted as
permitted by the rules and regulations of the Commission. Such additional
information may be obtained from the Commission's principal office in
Washington, D.C. Statements contained in this Prospectus or in any document
incorporated in this Prospectus by reference as to the content of any contract
or other document referred to herein or therein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an Appendix to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
TABLE OF CONTENTS
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PAGE
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Available Information................................................... 2
Incorporation of Certain Documents by Reference......................... 3
The Company............................................................. 4
Risk Factors............................................................ 5
Use of Proceeds......................................................... 8
Selling Shareholder..................................................... 8
Plan of Distribution.................................................... 9
Legal Matters........................................................... 9
Experts................................................................. 9
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE OFFERING MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY EXSORBET, THE SELLING SHAREHOLDER OR
ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO OR SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE UNDER THIS PROSPECTUS
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF EXSORBET SINCE THE DATE OF THIS PROSPECTUS.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by EXSORBET (File No.
0-25970) are incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K/A for the year ended December 31, 1995
(the "EXSORBET 1995 Form 10-K");
2. The description of EXSORBET Common Stock contained in its
Registration Statement on Form 10, filed with the Commission on May 2,
1995, as amended by Form 10, filed with the Commission on September 8,
1995;
3. Current Report on Form 8-K/A of March 11, 1996; and
4. Current Report on Form 8-K/A of December 11, 1995.
All documents filed by EXSORBET pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference herein from the date of filing such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in any subsequently filed 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.
EXSORBET will furnish without charge, upon written or oral request, to
each person, including any beneficial owner, to whom this Prospectus is
delivered, a copy of any or all of the documents incorporated by reference
herein other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to EXSORBET, Corporate Secretary, 6007 S. 29th Street,
Fort Smith, Arkansas 72903, (501) 649-8401.
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THE COMPANY
EXSORBET is a diverse environmental and technical services company with a
network of specialized subsidiaries (the "Subsidiaries"). EXSORBET and its
Subsidiaries seek to maintain a high level of technical expertise in providing a
broad range of environmental and technical services to their clients, including
environmental remediation, emergency response, environmental assessment and
project design and management. Generally, each of the Subsidiaries focuses on a
specific set of environmental and technical services that are provided to
clients either individually or in combination with related services of the other
Subsidiaries. EXSORBET's principal business operations are conducted through
EXSORBET itself and four Subsidiaries: Consolidated Environmental Services,
Inc. ("CESI"), Cierra, Inc., Spiltech Services, Inc. and Eco-Systems, Inc. All
four of these Subsidiaries were formed or acquired by EXSORBET in 1995.
EXSORBET operates primarily in the four state area of Arkansas, Texas, Oklahoma
and Mississippi. EXSORBET also manufactures and markets an organic, peat moss-
based absorbent material ("Exsorbet") used primarily to clean up oil and other
hydrocarbon-based materials. EXSORBET's principal office is located at 6007 S.
29th Street, Fort Smith, Arkansas 72903.
EXSORBET, an Idaho corporation, was originally formed on March 14, 1930 as
Sentinel Mines Corporation. From its inception until November 11, 1993,
EXSORBET was a shell corporation and had no substantial business operations. On
November 11, 1993, EXSORBET acquired Exsorbet Industries, Inc. ("Exsorbet-
Arkansas") which was in the development stages of forming a business to
manufacture and sell (i) Exsorbet and (ii) an organic poultry compost and soil
amendment fertilizer. EXSORBET ceased production of the compost and fertilizer
in the early fall of 1994.
On April 20, 1995, EXSORBET formed Exsorbet Technical Services, Inc., which
is in the business of conducting emergency spill response. After EXSORBET
acquired CESI on September 27, 1995, Exsorbet Technical Services, Inc. began
conducting its operations under the name "Spiltech Services, Inc" ("Spiltech").
On September 27, 1995, EXSORBET acquired CESI. CESI is a diversified
environmental products and services company, specializing in site remediation,
de-watering and pond solidification, hazardous waste clean-up materials and
services, bio-remediation, project management and twenty-four hour emergency
response service. In addition, CESI is the sole stockholder of Cierra, Inc.
("Cierra"), an environmental consulting firm.
On December 28, 1995, EXSORBET acquired Eco-Systems, Inc. which is an
environmental consulting/engineering firm, comprised of scientists and engineers
specializing in remedial investigations, remediation engineering, air quality,
waste water, regulatory compliance, solid waste engineering, litigation
support/expert testimony, environmental resources, industrial hygiene and
safety, twenty-four hour spill and emergency response, industrial maintenance,
remedial technologies/products and remediation contracting.
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RISK FACTORS
PRIOR TO MAKING AN INVESTMENT DECISION, PROSPECTIVE INVESTORS SHOULD
CONSIDER CAREFULLY ALL OF THE INFORMATION SET FORTH IN THIS PROSPECTUS AND, IN
PARTICULAR, SHOULD EVALUATE THE FOLLOWING RISK FACTORS.
LIMITED OPERATING HISTORY AND RISKS OF DEVELOPMENT
EXSORBET re-organized its activities and acquired or formed all four of its
Subsidiaries in 1995. Prior to this time, EXSORBET had engaged primarily in the
production of its peat moss based product, marketed under the name "Exsorbet."
See "The Company." EXSORBET had little or no experience in environmental
pollution, reclamation, and remediation prior to such time. While these recent
acquisitions are seen as favorable for EXSORBET, the acquisitions have increased
operating expenses significantly for EXSORBET. There can be no assurance that
EXSORBET will be able to maintain profitable operations in the future. Results
of operations in the future will be influenced by numerous factors including
technological developments, increases in expenses associated with sales growth,
market acceptance of EXSORBET's products and services, the capacity of EXSORBET
to expand and maintain the quality of its products and services, competition and
the ability of EXSORBET to control costs. There can be no assurance that
revenue growth or profitability on a quarterly or annual basis will be
sustained. Additionally, EXSORBET will be subject to all the risks incident to
a rapidly developing business with only a limited history of operations.
Prospective investors should consider the frequency with which relatively newly
developed and/or expanding businesses encounter unforeseen expenses,
difficulties, complications and delays, as well as such other factors as the
possibility of competition with larger companies.
FUTURE SALES OF COMMON STOCK
EXSORBET is unable to predict the effect that sales made under Rule 144,
pursuant to this Registration Statement or otherwise, may have on the then
prevailing market price of the EXSORBET Common Stock although any substantial
sale of restricted securities pursuant to Rule 144 may have an adverse effect.
In February 1996, Floyd Leland Ogle, a former President of EXSORBET, gifted the
Offered Shares to the Selling Shareholder. The Trustee must liquidate the
Selling Shareholder's holdings by March of 1998 or as soon as practicable as
permitted by applicable law. The Trust Instrument provides that the Trustee
will attempt to sell approximately 3,000 shares of EXSORBET Common Stock each
day until the shares held by the Selling Shareholder are sold. See "Selling
Shareholder" and "Plan of Distribution." The average trading volume for the
EXSORBET Common Stock since January 1, 1996 has been approximately 21,500 shares
per day. Accordingly, the sale of a substantial number of shares of EXSORBET
Common Stock in the public market could adversely affect the market price of
EXSORBET Common Stock.
NEW INDUSTRY
The Pollution/Reclamation/Remediation industry is an emerging business
characterized by an increasing number of market entrants. As is typically the
case in an emerging industry, demand and market acceptance for services is
subject to a high level of uncertainty. In light of the continually evolving
nature of this industry, there can be no assurance as to the ultimate level of
demand or market acceptance for EXSORBET's services or products and services.
In addition, there can be no assurance that EXSORBET will successfully implement
its business strategies, expand its training capacity, maintain the cost
competitiveness of its services, meet its current marketing objectives or
succeed in positioning its services as the desired means of delivery of
Pollution/Reclamation/Remediation services.
TECHNOLOGICAL CHANGES
The Pollution/Reclamation/Remediation industry is subject to rapid
technological changes and service obsolescence. The advent and development of
other technology, in particular, could materially affect the manner in which
products and services in the Pollution/Reclamation/Remediation field compete
effectively. EXSORBET must offer technologically oriented products and services
which receive client acceptance and fulfill client needs. To the extent that
EXSORBET fails to keep up with technological advancements and enhancements
comparable to and competitive with those made by others in the industry, the
marketing of EXSORBET's products and services may prove unsuccessful. There
can be no assurances that EXSORBET's products and services will not be rendered
obsolete by changing technology or that EXSORBET will be able to respond to
advances in technology in a manner that will be commercially feasible.
COMPETITION
At the present time, the Pollution/Reclamation/Remediation and related
services industry in general is highly competitive and expected to continue to
be so in the future. EXSORBET will be competing directly or indirectly with a
large number of companies, various of which may be larger, better capitalized,
more established and which may have
5
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greater access to resources necessary to produce a competitive advantage.
Although EXSORBET believes that its products and services presently and
prospectively can occupy a competitive market position, there can be no
assurance that EXSORBET will ever be able to effectively compete in this
market.
TRAINING AND DIFFICULTY OF MAINTAINING QUALITY CONTROL
EXSORBET will be required to continue to undertake extensive training
of personnel upon expanding its operations in order that Pollution/
Reclamation/Remediation products and services may be provided in a
professionally acceptable and consistent manner. EXSORBET will also need to
further develop its system of administration as well as personnel management
in order to maintain the quality of products and services on a consistent
basis. There can be no assurance that EXSORBET will be able to achieve a
level of consistency for its service personnel on a broad scale basis, or
that the organization required to administer such initial and ongoing
training will not involve substantial costs that will affect the ability of
EXSORBET to provide its products and services on a cost-effective basis.
RISKS ASSOCIATED WITH EXPANSION AND ACQUISITIONS
EXSORBET has made, and may make in the future, acquisitions of firms
providing comparable services. Any acquisitions or expansion of operations that
EXSORBET may undertake will entail substantial risks because they will involve
specific operations which may be unfamiliar to EXSORBET's management. At the
present time, EXSORBET has only limited management personnel, has not identified
any specific firms that it proposes to acquire and its management has had
limited experience in making acquisitions. Consequently, shareholders must
assume the risk that EXSORBET (i) may acquire or develop operations for which
EXSORBET does not possess sufficient managerial background to administer
effectively, (ii) such acquisitions and expansion may ultimately involve
expenditure of funds beyond the resources that will be available to EXSORBET at
that time and (iii) management of such new or expanded operations may divert
management's attention and resources away from its existing operations, all of
which factors may have a material adverse effect on EXSORBET's present and
prospective business activities.
SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR WORKING CAPITAL AND ADDITIONAL
FINANCING
There can be no assurance that any funds available to or raised by
EXSORBET, together with the revenues of EXSORBET, will be sufficient for
EXSORBET's immediately anticipated needs or that conditions and circumstances
described herein may not result in subsequent cash requirements by EXSORBET in
the immediate future just to sustain operations. In the event of such
developments, attaining financing under such conditions may not be possible, or
even if additional capital may be otherwise available, the terms on which such
capital may be available may not be commercially feasible or advantageous to
investors.
DEPENDENCE UPON KEY PERSONNEL
The success of EXSORBET is highly dependent upon the continued services of
Dr. Edward Schrader, Mr. Charles E. Chunn, Jr. and Mr. Sam Sexton, III, who are
EXSORBET's principal executive officers. Although EXSORBET has entered into
employment agreements with Dr. Schrader, Mr. Chunn and Mr. Sexton, and EXSORBET
has under employment various other skilled executives and employees, the loss of
any of their services would have a material adverse effect on the business of
EXSORBET. EXSORBET does not presently maintain key man insurance on the lives
of any of such executives. There can be no assurance that EXSORBET will be able
to replace any of these key executives in the event that their services become
unavailable.
COMPETITION FOR KEY PERSONNEL
The competition for recruitment of personnel in the
Pollution/Reclamation/Remediation industry is continuous and highly intense.
EXSORBET's success will depend in part on its ability to recruit, train and
retain highly skilled executive, technical and marketing personnel. There can
be no assurance that EXSORBET will, in fact be in a position to secure and
retain the services of such highly skilled personnel to support EXSORBET's
contemplated operating and products expansion program.
POSSIBLE VOLATILITY OF STOCK PRICE
The historical fluctuations in the market price of EXSORBET's Common Stock
indicate that the market price of EXSORBET Common Stock may be highly volatile.
Factors such as fluctuations in EXSORBET's operating results, relationships with
present and potential distributors, announcements of technological innovations
or new products by EXSORBET or its competitors, and changes in market conditions
and in the economy generally, may have a significant impact on the market price
of EXSORBET Common Stock.
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EFFECT OF OUTSTANDING OPTIONS
As of April 10, 1996, there are outstanding stock options to purchase an
aggregate of 1,619,667 shares of EXSORBET Common Stock, which have exercise
prices ranging between $0.01 to $8.00 per share. To the extent that these
outstanding securities are exercised or converted, dilution of the percentage
ownership of EXSORBET's shareholders will occur. Sales in the public market of
EXSORBET Common Stock underlying the options and warrants may adversely affect
prevailing market prices for EXSORBET Common Stock. Moreover, the terms upon
which EXSORBET may be able to obtain additional equity capital may be adversely
affected because the holders of such outstanding securities can be expected to
exercise them at a time when EXSORBET would, in all likelihood, be able to
obtain any needed capital on terms more favorable to EXSORBET than those
provided in the outstanding securities.
NO DIVIDENDS ANTICIPATED TO BE PAID
EXSORBET has not paid its shareholders any cash dividends since its
inception and does not anticipate paying cash dividends to its shareholders in
the foreseeable future. The future payment of dividends is directly dependent
upon future earnings of EXSORBET, its financial requirements and other factors
to be determined by EXSORBET's Board of Directors. For the foreseeable future,
it is anticipated that any earnings that may be generated from EXSORBET's
operations will be used to finance the growth of EXSORBET and that cash
dividends will not be paid to shareholders.
LIMITED MARKET FOR EXSORBET'S SECURITIES
There is currently only a limited trading market for the EXSORBET Common
Stock. The EXSORBET Common Stock trades on the Nasdaq SmallCap under the symbol
"EXSO," which is subject to substantial restrictions and limitations. There can
be no assurance that more than a limited market will ever develop for the
EXSORBET Common Stock.
PROPRIETARY PROTECTION
EXSORBET has a patent application pending for the protection of its Kersey
Dryer, a machine that reduces the costs of processing in the process of
manufacturing the "Exsorbet" product. To date no protests have been filed with
the U.S. Patent Office responsive to the application. Because of the nature of
this machine and the method which it utilizes, it should be anticipated that
competitors in the field will or may protest the granting of the patent. In the
opinion of counsel, there is no other equipment which operates similarly, but
there can be no assurance that the patent will be granted without extensive
delays.
GOVERNMENTAL REGULATION
The Pollution/Reclamation/Remediation industry is subject to stringent
oversight and regulation by local, state, and federal regulatory agencies.
EXSORBET cannot be assured that the regulations currently in force will not be
changed or altered. A change in any regulations, or more stringent regulations
or governmental oversight, could substantially increase the operating costs of
EXSORBET.
NEW TECHNOLOGICAL PROCESS
EXSORBET has acquired the right to use a new biological technology in its
"Exsorbet" product. It is believed that the process facilitates the
immobilization of contaminants, while metabolizing and destroying them. The
process is being prepared for submission to the U.S. Patent Office as a
biological waste degradation and contamination product. There can be no
assurance that a patent can be obtained for the product. While testing of the
product has occurred, the long-term effects of the product have not been
assessed. EXSORBET cannot be assured of the long-term environmental effects of
the product.
EXCLUSIVE DISTRIBUTORSHIP
On June 26, 1995, EXSORBET entered into an agreement with Waste Solutions
Corp. ("WSC") for WSC to be the exclusive distributor of the "Exsorbet" product
within the continental United States with respect to any sales other than sales
to the United States Government. There can be no assurance regarding the
ability of WSC to market the product.
7
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USE OF PROCEEDS
EXSORBET will not receive any of the proceeds from the sale of shares of
EXSORBET Common Stock by the Selling Shareholder. EXSORBET has agreed to
advance on behalf of the Selling Shareholder certain costs and expenses incurred
in connection with the registration under the Securities Act of the offering
described herein, not including certain expenses such as commissions and
discounts of underwriters, dealers and agents, all of which costs and expenses
Selling Shareholder has agreed to reimburse to EXSORBET. Selling Shareholder
has agreed to bear all costs and expenses relating to the registration of the
Offered Shares under state and federal securities laws (currently estimated to
be $41,097, and of any offering and sale by it hereunder including expenses such
as brokerage fees, commissions and discounts of underwriters, dealers or agents,
if any. See "Plan of Distribution."
SELLING SHAREHOLDER
All of the 1,508,100 Offered Shares of EXSORBET Common Stock are being
offered by the Selling Shareholder hereby. The Selling Shareholder will not
hold any shares of EXSORBET Common Stock following the offering contemplated
hereby if all the Offered Shares are sold. See "Plan of Distribution."
In February 1996, Floyd Leland Ogle, a former President of EXSORBET, gifted
1,458,100 shares of EXSORBET Common Stock and an immediately exercisable option
for 50,000 shares of EXSORBET Common Stock to the Selling Shareholder, whose
sole beneficiary is Mr. Ogle's wife, Terie Elson Ogle, as provided in the Trust
Instrument. Mr. Ogle's shares placed in trust comprise the Offered Shares being
offered hereby and represent approximately 17.1% of the total outstanding shares
of EXSORBET Common Stock. Following Mr. Ogle's gift to the Selling Shareholder,
and pursuant to the Grant, EXSORBET granted the Selling Shareholder certain
registration rights in the shares of EXSORBET Common Stock owned by it. The
shares offered hereby are being registered pursuant to such Grant of
registration rights. Selling Shareholder's Trustee is required by the Trust
Instrument to liquidate the Selling Shareholder's holdings by March of 1998 or
as soon as practicable as permitted by applicable law. The Trust Instrument
provides that the Trustee will attempt to sell approximately 3,000 shares of
EXSORBET Common Stock each day until all shares held by the Selling Shareholder
are sold. According to Schedule 13D dated February 29, 1996 filed by the
Trustee, the Trustee has sole voting and dispositive power with respect to the
Offered Shares and is deemed to be the beneficial owner of such shares. See
"Plan of Distribution."
Pursuant to the terms of the Grant, EXSORBET has agreed to use all
commercially reasonable efforts to effect the registration under the Securities
Act of the resale of the EXSORBET Common Stock by the Selling Shareholder,
subject to certain restrictions. EXSORBET has agreed to keep continuously
effective the Registration Statement in respect of the Offered Shares for the
period of time necessary for the Selling Shareholder to complete the intended
method or methods of distribution for the Offered Shares. See "Plan of
Distribution."
8
<PAGE>
PLAN OF DISTRIBUTION
Selling Shareholder's Trustee is required by the Trust Instrument to
liquidate the all of the Selling Shareholder's holdings of EXSORBET Common Stock
by March of 1998 or as soon as practicable as permitted by applicable law. The
Trust Instrument provides that the Trustee will attempt to sell approximately
3,000 shares of the Common Stock each day until all shares held by the Selling
Shareholder are sold, all of which are the Offered Shares being offered hereby.
See "Selling Shareholder."
EXSORBET will not receive any proceeds from the sale of EXSORBET Common
Stock owned by the Selling Shareholder. It is anticipated that the Selling
Shareholder will offer the securities described herein in the manner set forth
on the cover page of this Prospectus from time to time to or through brokers,
dealers, or underwriters acting as either principals or agents or directly to
other purchasers or through agents in one or more transactions on the Nasdaq
SmallCap or any other stock exchange on which the EXSORBET Common Stock is
listed, in the over-the-counter market, in one or more private transactions, or
in a combination of such methods of sale, at prices and on terms then
prevailing, at prices related to such prices, or at negotiated prices. The
Selling Shareholder will bear the expenses of any distribution or resale,
including the payment of any commission, discount, or transfer tax in connection
with any resale. In addition, such distributions and resales may occur
electronically, rather than through the issuance of certificates. The Selling
Shareholder and any brokers and dealers through whom sales of the Offered Shares
are made may be deemed to be "underwriters" within the meaning of the Securities
Act, and the commissions or discounts and other compensation paid to such
persons may be regarded as underwriters' compensation.
The net proceeds to the Selling Shareholder from the sale of EXSORBET
Common Stock so offered will be the purchase price of the EXSORBET Common Stock
sold less the aggregate agents' commissions and underwriters' discounts, if any,
and other expenses of issuance and distribution borne by the Selling
Shareholder.
At any time a particular offer of EXSORBET Common Stock is made, to the
extent required, the specific shares of EXSORBET Common Stock to be sold, the
name of the Selling Shareholder, purchase price, public offering price, the
names of any agent, dealer or underwriter and any applicable commission or
discount with respect to a particular offering will be set forth in an
accompanying Prospectus Supplement. Such Prospectus Supplement may, if
necessary, be in the form of a post-effective amendment to the Registration
Statement of which this Prospectus is a part, and will be filed with the
Commission to reflect the disclosure of additional information with respect to
the distribution of such securities.
Pursuant to the terms of the Grant and that certain Agreement dated as of
February 24, 1996 by and between Trustee and EXSORBET, EXSORBET has agreed to
indemnify the Selling Shareholder and the Trustee against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
Selling Shareholder may be required to make in respect thereof.
To comply with the securities laws of certain jurisdictions, the securities
offered hereby will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
The Selling Shareholder and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-2, 10b-6 and 10b-7, which provisions may limit the timing of purchases and
sales by the Selling Shareholder and any other such person. Furthermore, under
Rule 10b-6 under the Exchange Act, any person engaged in a distribution of
EXSORBET Common Stock may not simultaneously engage in market making activities
with respect to such securities for a period of two business days prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the securities offered hereby.
LEGAL MATTERS
The legality of the shares of EXSORBET Common Stock being offered hereby
will be passed upon for EXSORBET by Sam Sexton III, general counsel of EXSORBET.
EXPERTS
The consolidated financial statements incorporated by reference in this
Prospectus from the EXSORBET 1995 Form 10-K have been so incorporated in
reliance on the report of Cooper, Shuffield & Company, independent auditors,
given on the authority of said firm as experts in auditing and accounting, as
set forth in their report thereon included therein and incorporated herein by
reference.
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The table below sets forth the estimated expenses expected to be
advanced by EXSORBET, which will later be reimbursed for such expenses by the
Selling Shareholder, in connection with the issuance and distribution of the
EXSORBET Common Stock covered by this Registration Statement. The Selling
Shareholder has agreed to bear all costs and expenses in connection with the
issuance and distribution of the EXSORBET Common Stock covered by this
Registration Statement.
SEC Registration Fee................................ $ 2,097
Printing and Engraving Expenses..................... 3,000
Legal Fees and Expenses (other than Blue Sky)....... 25,000
"Blue Sky" Fees and Expenses........................ 3,000
Accounting Fees and Expenses........................ 5,000
Miscellaneous....................................... 3,000
--------
Total............................................ $ 41,097
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 8.01 titled "Directors and Officers Indemnification" of
EXSORBET's Bylaws as adopted on December 31, 1993 provides for indemnification
of directors and officers under certain circumstances. Section 8.01 provides
as follows:
"8.01 DIRECTORS AND OFFICERS INDEMNIFICATION. Every person who was or
is a party or is threatened to be made a party or is involved in any
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, by reason of the fact that he is or was a director or
officer of the Corporation or is or was serving at the request of the
Corporation as a director or officer of another corporation, or as its
representative in partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless to the fullest extent legally
permissible against all expenses, liabilities and losses (including
attorney's fees, judgments, fines and amounts paid or to be paid in
settlement) reasonably incurred or suffered by him in connection
therewith. Such right of indemnification shall be a contract right that
may be enforced in any lawful manner by such person. Such right of
indemnification shall not be exclusive of any other right which such
director or officer may have or hereafter acquire and, without limiting
the generality of such statement, he shall be entitled to his rights of
indemnification under any agreement, vote of stockholders, provision of
law, or otherwise, as well as his rights under this paragraph. The board
of directors may cause the Corporation to purchase and maintain insurance
on behalf of any person who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred in any such capacity
or arising out of such status, whether or not the Corporation would have
power to indemnify such person. The provisions of this paragraph shall,
however, be inapplicable to provide any indemnification to any officer or
director for any liability resulting from theft or embezzlement of
corporate funds, property, or assets or otherwise inapplicable if
indemnification is otherwise restricted by applicable statute."
II-1
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
*5.1 Opinion of Sam Sexton III
*23.1 Consent of Cooper, Shuffield & Company
*23.3 Consent of Sam Sexton III (included in Exhibit 5.1)
*24 Power of Attorney (see signature pages of Registration Statement)
______________
* Filed herewith.
ITEM 17. UNDERTAKINGS
(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)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective 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;
(2) That, for the purpose of determining any liability under the
Securities Act, 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, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Smith, State of Arkansas, on May 8, 1996.
EXSORBET INDUSTRIES, INC.
By: /s/ Charles Chunn, Jr.
-----------------------------------
CHARLES CHUNN, JR.
CHAIRMAN OF THE BOARD AND CHIEF FINANCIAL
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. Each person whose signature appears
below hereby authorizes and appoints Dr. Edward L. Schrader, Charles Chunn,
Jr. and Sam Sexton III and each of them, either one of whom may act without
joinder of the other, as his attorney-in-fact to sign on his behalf individually
and in the capacity stated below all amendments and post-effective amendments
to this Registration Statement as that attorney-in-fact may deem necessary or
appropriate.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Charles Chunn, Jr. Chairman of the Board, Chief Financial May 8, 1996
- -------------------------- Officer Vice President and Director
CHARLES CHUNN, JR. (Principal Executive Officer, Principal
Financial Officer and Pricipal
Accounting Officer)
/s/ Dr. Edward L. Schrader President and Director May 8, 1996
- --------------------------
DR. EDWARD L. SCHRADER
/s/ Sam Sexton III Secretary and Director May 8, 1996
- --------------------------
SAM SEXTON III
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5.1 Opinion of Sam Sexton III
23.1 Consent of Cooper, Shuffield & Company
<PAGE>
[EXSORBET LETTERHEAD]
May 8, 1996
TO THE BOARD OF DIRECTORS
OF EXSORBET INDUSTRIES, INC.
Re: Registration of Common Stock of Exsorbet Industries, Inc.
Gentlemen:
On or about May 8, 1996, Exsorbet Industries, Inc., an Idaho corporation (the
"Company"), filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"). Such
Registration Statement relates to the registration by the Company of an
aggregate of 1,508,100 shares of its common stock, $.001 par value per share
(the "Shares"). I have acted as counsel to the Company in connection with the
preparation and filing of the Registration Statement.
In connection therewith, I have examined and relied upon the original or
copies, certified to my satisfaction, of (i) the Articles of Incorporation
and the Bylaws of the Company; (ii) copies of resolutions of the Board of
Directors of the Company authorizing the issuance of the Shares and related
matters; (iii) the Registration Statement and all exhibits attached there;
and (iv) such other documents and instruments as I have deemed necessary for
the expression of opinions herein contained. In making the foregoing
examinations, I have assumed the genuineness of all signatures and the
authenticity of all documents submitted to me as originals, and the
conformity to original documents of all documents submitted to me as
certified or photostatic copies. As to various questions of fact material to
this opinion, I have relied, to the extent I deem reasonably appropriate,
upon representations or certificates of officers or directors of the Company
and upon documents, records and instruments furnished to me by the Company,
without independent check or verification of their accuracy.
Based upon the foregoing examination, I am of the opinion that the Shares to
be registered by the Company as described in the Registration Statement when
sold, will be legally issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, I do not admit that I come
within the category of persons whose consent is required by Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Sam Sexton III
Sam Sexton III
Attorney at Law
<PAGE>
EXHIBIT 23.1
CONSENT OF COOPER, SHUFFIELD & COMPANY
Cooper, Shuffield & Company, independent auditors for Exsorbet
Industries, Inc., consents to the use of any of its reports, notes, and
financial statements filed with this report to be used or incorporated by
reference into any future report, statement, filing, or schedule filed with
the Securities and Exchange Commission, National Association of Securities
Dealers, or any other governmental agency. Cooper, Shuffield & Company
further consents to the use by incorporation in this filing of any of its
reports, notes, and financial statements previously filed by Exsorbet
Industries, Inc. with any report, statement or other filing with the United
States Securities and Exchange Commission.
Dated: May 7, 1996
COOPER, SHUFFIELD & COMPANY
By: /s/ Dennis Cooper
---------------------------
Authorized Agent
